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The roughest month of the year for stocks kicked off on Wednesday with a mixed response from the major indices, though the NASDAQ managed to finish with another record high. Meanwhile, the ADP report for August was a bit disappointing in the first of three jobs reports to be released the rest of this week.
The NASDAQ climbed 0.33% (or about 50 points) to a new closing high of 15,309.38, while the S&P is less than five points shy of its own history after inching forward 0.03% to 4524.09. But the Dow was lower for its third straight session with a slide of 0.14% (or about 48 points) to 35,312.53.
And now begins September, which is historically the worst month of the year for stocks. In addition to its reputation, we’ll also see a Fed meeting this month that may outline some sort of asset tapering plan. Stocks just completed a solid performance for August with the NASDAQ rising 4%, the S&P advancing just under 3% and the Dow increasing 1.2%.
The rest of this week is full of important economic data, including today’s ADP employment report. Private payrolls added only 374,000 jobs last month, which was well off expectations of more than 600K. It’s the first of three straight days of jobs data, followed by jobless claims on Thursday and the Government Employment Situation on Friday.
By the way, the ADP report last month was a disappointment too with only 330K jobs being added instead of closer to 700K as expected. However, it wasn’t a harbinger for the monthly jobs report two days later, which blew past expectations by adding 943K.
Other data on Wednesday was more promising, such as ISM manufacturing for August rising to 59.9 from 59.5 in July and beating expectations. Remember, anything over 50 means expansion. And construction spending rose 0.3% in July, compared to breakeven in June.
Today's Portfolio Highlights:
Counterstrike: Retailers showed off quite a bit this earnings season, and one of the most impressive performances came from consumer electronics giant Best Buy (BBY). This Zacks Rank #1 (Strong Buy) beat the Zacks Consensus Estimate by 56% in its most recent report, sending shares sharply higher in response. However, the stock has since pulled back by more than 7% from highs and is now in Jeremy’s wheelhouse. The editor added BBY on Wednesday with a 5% allocation and plans to add more if these levels hold. Read the complete commentary for more on this new buy.
Home Run Investor: Could water really be a ‘home run’ idea? According to Californians, the answer is a resounding “Yes!”. The water supply is a huge issue in that state since it’s apparently in a perpetual drought. So Brian added Energy Recovery (NASDAQ:ERII) on Wednesday, which is a water desalination play based in the Golden State. This Zacks Rank #2 (Buy) has topped the Zacks Consensus Estimate in each of the last four quarters with an average surprise of 150%. Revenue is expected to jump 20% next year, while the valuation and margins will improve as growth produces more earnings. See the full write-up for more.
Surprise Trader: Apparel has been hot this earnings season. In fact, the space is in the top 9% of the Zacks Industry Rank. So Dave decided to add Oxford Industries (NYSE:OXM) on Wednesday, which has brands that include Tommy Bahama, Lilly Pulitzer, Oxford Gold and others. This Zacks Rank #2 (Buy) has a positive Earnings ESP for the quarter coming after the bell tomorrow. If the company reaches the Zacks Consensus Estimate of $2.33 in the quarter, it would mark year-over-year EPS growth of 713% and sales growth of 60.5%. The editor added OXM with a 12.5% allocation, while also selling Advance Auto Parts (NYSE:AAP). Read the full commentary for more on all of today’s action.
Blockchain Innovators: This portfolio had the best performing stock of the day among all ZU names as iClick Interactive Asia Group (ICLK) rose 14.8%. eGain Corp. (NASDAQ:EGAN) made the Top 5 as well with an increase of 7.7%. The service also has one of the biggest winners over the past 30 days as Exp World Holdings (EXPI) is up 39.6%.
Have a Great Evening,
Jim Giaquinto
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