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Money flowed out of economically-sensitive areas for the second consecutive session on Wednesday, leading to another day of losses for the Dow and S&P (NYSE:SPY) but helping the NASDAQ to close above 10,000 for the first time ever.
All eyes were on the Fed and Chair Jerome Powell’s post-meeting statements. Basically, the central bank plans to keep doing all it can to support this economy, which has a long way to go before being healthy again.
Stocks were obviously waiting for the Fed news and then chopped around after the announcement. The end result was a market quite similar to yesterday’s.
The NASDAQ is again outperforming its counterparts as investors are getting back into tech after flirting with stocks that would benefit most from the reopening economy.
The index momentarily crossed over 10,000 yesterday and closed above that mark today. It advanced 0.67% (or about 66 points) to 10,020.35 for its third straight session with a record high.
Apple (AAPL, +2.57%) and Amazon (NASDAQ:AMZN, +1.79%) continued their record-setting runs, while Tesla (NASDAQ:TSLA,+8.87%) and Microsoft (NASDAQ:MSFT, +3.71%) also took advantage of the renewed interest in tech.
The S&P dipped 0.53% to 3190.14, while the Dow again saw the sharpest decline with a slip of 1.04% (or about 282 points) to 26,989.99.
The Dow has declined 2% in the past two sessions, but had gained approximately 8% during its recent 6-day winning streak.
Most of what Powell said was expected, including the plan to keep rates low for the foreseeable future while this economy works through all the damage done during the shutdown.
However, the outlook going forward remains uncertain and there could be a “long road back” to pre-virus strength. Such a forecast undoubtedly disappointed much of the market, which has been optimistic lately that the recovery could happen quicker.
Let’s see if there’s any delayed reaction to the Fed news tomorrow… and if the NASDAQ can keep making new highs.
Today's Portfolio Highlights:
Surprise Trader: Steel stocks have been absent from the portfolio for several quarters now, but that changed on Wednesday when Dave added Commercial Metals (CMC). The company manufactures, recycles and markets steel and metal products, related materials and services. It has beaten the Zacks Consensus Estimate for five straight quarters and appears poised to do it again with an Earnings ESP of 17.65% for the quarter coming before the bell on Thursday, June 18. The editor added CMC on Wednesday with a 12.5% allocation. Meanwhile, he also sold Navistar (NYSE:NAV) for a 10.2% return in less than two weeks. Read the complete commentary for more on today’s moves.
Counterstrike: "I’ve never seen such a wide disparity between the S&P and the Nasdaq so trying to figure out what happens next is challenging.
"The big question is what happens when tech hits the wall. We will see some liquidation at some point, but if supply hits the market on fear, will the S&P diverge or will we see them move together?
"There is potential for a selloff based simply on gravity. But I’m seeing a lot of rumblings about increasing COVID cases in Texas and Arizona. While I don’t believe this is something the market should fear, we could get some selling if bad headlines start to resurface. In my opinion, the pandemic is over when it comes to the market as long as we don’t see shutdowns again." -- Jeremy Mullin, who had one of the top performers of the day with Zynex (NASDAQ:ZYXI, +6.3%).
All the Best,
Jim Giaquinto
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