Stocks suffered their second sharp selloff of the week on Wednesday, as investors continue to grapple with a rise in coronavirus cases that threaten more lockdowns and further delays in the economic recovery.
Parts of Europe have begun re-implementing restrictions, and even here in Chicago indoor dining is shuttered again. The market has been fearing something like this for a while now, and that concern was unleashed in today’s session.
The NASDAQ plunged 3.73% (or about 426 points) to 11,004.87, while the S&P dropped 3.53% to 3271.03. The Dow was off 3.43% (or around 943 points) to 26,519.95.
The Dow now has a four-day losing streak and has lost more than 1800 points this week… which is only three days old. The S&P has a three-day skid, while the NASDAQ was actually higher yesterday.
“The good news for the patient investors is, this too shall pass,” said Dave Bartosiak in Surprise Trader.
“And when it does, it will still be those names with the strongest earnings which will outperform. That is why I always stick to my guns, even when it looks like that alien invader force is far superior.”
For now though, the market isn’t paying much attention to this solid earnings season, which is all the more frustrating since a stimulus deal probably could have alleviated at least some of the fear.
However, investors might not be able to ignore FAANG Day tomorrow, when Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL) (GOOG) all report after the bell.
These stocks led the fastest economic rebound in history off the coronavirus lows of late March. And if we need to slow things down again, then you can bet the market will be leaning on these names like never before.
Today's Portfolio Highlights:
Home Run Investor: The market remains under pressure as coronavirus cases rise, so Brian thought it was a good time to get rid of a stock with heavy consumer exposure. On Wednesday, he sold natural & organic foods company Hain Celestial (NASDAQ:HAIN) to secure a 19.9% return in a little over six months. The new buy is Meridian Bioscience (NASDAQ:VIVO), a life science company that makes innovative diagnostic test kits, purified reagents and biopharmaceutical-enabling technologies. With the demand for tests likely to outstrip supply, VIVO should see an increase in its market share. It has beaten the Zacks Consensus Estimate in each of the last four quarters and has amassed an average surprise of 107% in that time. It will report again next month. Read the full write-up for more on today’s moves.
Surprise Trader: You won't run into a whole lot of people while climbing up a mountain or skiing down it. That’s why outdoor equipment & apparel company Clarus Corporation (NASDAQ:CLAR) has been “a bright spot among a volatile market”, according to Dave. The company has a strong Earnings ESP of 23.53% for the quarter coming after the bell on Monday, November 9. It beat by 33% last quarter. Shares have really bounced back after the company withdrew a convertible senior notes offering that the market didn’t like. Dave added CLAR on Wednesday with a 12.5% allocation, while also selling Corning (NYSE:GLW). See the full write-up for more on today’s action.
Insider Trader: It’s been a great run for Bed Bath & Beyond (NASDAQ:BBBY) in this portfolio, but Tracey decided to sell the remaining shares on Wednesday. Worries about the global economy are increasing due to rising coronavirus cases, while the easy bounce off the lows is now over. This domestic merchandise & home furnishings specialty retailer still has a lot of difficulties to overcome in an industry ruled by the likes of Target (NYSE:TGT), Walmart (NYSE:WMT) and Amazon. Therefore, the editor sold the rest of BBBY for a 130% return in just a little over three months. The first part was sold less than two weeks ago and also for a triple-digit return. Tracey sold Union Pacific (NYSE:UNP) and Intel (NASDAQ:INTC) today as well since the stocks continue to slide. UNP brought a return of 19% in less than 7 months.
Large-Cap Trader: With coronavirus cases on the rise again, John moved things around on Wednesday and added three large-cap, home-related stocks. These are names that should do well in the current environment. But first, the editor sold a trio of ‘sidewinders’, including Best Buy (BBY, +2.1%), Hubbell (HUBB) and Brunswick (NYSE:BC). Use the cash to split equally among these new buys:
• Whirlpool (NYSE:WHR) – home appliances giant
• Mohawk Industries (NYSE:MHK) – flooring products manufacturer
• 3M Company (NYSE:MMM) – diversified technology firm
WHR is a Zacks Rank #1 (Strong Buy), while MHK and MMM are Zacks Rank #2s (Buys). They also have solid Zacks Style Scores, come from highly-ranked industries and have good records of beating the Zacks Consensus Estimate. Overall, these moves account for about 6.7% to 6.8% of the whole portfolio. Read the full write-up for more on today’s moves.
Income Investor: A 6.2% advance is a great performance any day of the week, but it's downright stunning in a session when the S&P plunges more than 3.5%. That's what Automatic Data Processing (NASDAQ:ADP) accomplished on Wednesday after solid fiscal first quarter results. Adjusted earnings beat the Zacks Consensus Estimate by more than 45%, while total revenues topped by over 5%. This provider of cloud-based HCM technology solutions was the best performer among all ZU names today.
All the Best,
Jim Giaquinto
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