You’d think an epic selloff was inevitable after learning that the coronavirus would impact Apple’s results, but instead stocks came well off their lows on Tuesday with one index even closing at a new high.
Yesterday, the iPhone maker said that the sickness would pull its second-quarter revenue below expectations, which were between $63 billion and $67 billion.
The market was already nervous about the coronavirus, and now it begins this short week knowing that it will hurt one of the strongest, most valuable companies in the world.
Apple also serves as a barometer for the whole economy, leaving investors concerned that the full consequence of this virus hasn’t been felt yet.
So naturally, the major indices started Tuesday sharply lower. But then…
The NASDAQ (of all indices!) turned positive late in the session and finished higher by 0.02% (or about 1.57 points) to 9732.74. Since it started the session at an all time high, ANY advance meant a new record.
While Apple (NASDAQ:AAPL) slipped 1.8% on its warning, the remaining FAANGs were positive (except for a slight 0.07% loss for Alphabet (NASDAQ:GOOGL)). Netflix (NASDAQ:NFLX) and Facebook (NASDAQ:FB) each rose by nearly 2%.
The other indices couldn’t make it all the way back, but did come well of their lows. The S&P slipped 0.29% to 3370.29 and the Dow dropped 0.56% (or about 165 points) to 29,232.19. The latter index had been down by approximately 280 points at its worst.
Stocks are coming off back-to-back weekly gains. The NASDAQ jumped 2.2% last week, while the S&P and Dow improved 1.6% and 1%, respectively.
Since the market was closed yesterday, we’re already halfway through the week with some ground to recover to keep the streak alive. Fortunately, the market is still handling the coronavirus rather well. Let’s hope it continues…
Today's Portfolio Highlights:
Commodity Innovators: The first three picks of this brand-new portfolio were released today, and Jeremy kicked things off with plays on a couple metals and a morning staple. The inaugural buys are:
• Aberdeen Standard Physical Platinum Shares ETF (PPLT) – a play on platinum, which appears to be grinding higher after being in a bear market for almost a decade
• Southern (NYSE:SO) Copper (SCCO) – a copper miner that moved lower due to the coronavirus and is reporting next Friday. The editor is looking at the ‘bigger picture’ here and willing to wait for the metal (and this stock) to snap back
• IPath Series B Bloomberg Coffee Subindex Total Return ETN (JO) – coffee has been hurt by the coronavirus and its impact on the commodity’s supply side. Once the sickness is under control, the editor expects a nice rebound
Read the full write-up for a lot more on these first picks, including their holding periods. And remember that future commentaries will be released on Mondays.
Stocks Under $10: The portfolio is fully invested once again with today’s addition of Endurance International (EIGI), a Zacks Rank #2 (Buy) provider of cloud-based solutions. It is the parent of several businesses, including email marketing firm ConstantContact and SiteBuilder. The stock beat earnings by 20% in its most recent report and guided inline. Brian wanted to wait for a pullback before adding EIGI, but the stock isn’t cooperating. Therefore, the editor bought it today and still feels he’s getting in at a good spot. Read the full write-up for more. By the way, this portfolio had the best performer of the day with SunPower (SPWR) jumping 10.4%.
Surprise Trader: When the fake meat craze just won’t suffice, it’s time to grab a real steak at a Ruth’s Chris Steak House. Dave is hoping he can grab a profit as well with a 12.5% allocation in that restaurant’s holding company Ruth’s Hospitality (RUTH). This Zacks Rank #1 (Strong Buy) reports before the bell on Friday and has a positive Earnings ESP of 7.29%. The editor also sold independent investment management firm Artisan Partners (APAM) for a 5.9% return in less than three weeks, which does NOT include the positive impact of its special dividend. Read the full write-up for more.
Options Trader: With only 30 days of time left and the position generating nearly triple-digit returns, Kevin decided to pull his profits in asset management solutions provider SEI Investments (SEIC). The editor sold to close the 2 March 60.00 Calls that were added in November, banking a gain of 92%. Usually, the editor would immediately reinvest, but he’s holding off on that for now. So read his full write-up for more on today’s sell and get ready for a new addition in the days ahead.
Zacks Short List: This week’s adjustment included only one swap. The portfolio short-covered GDS Holding (GDS, +1.2%) and replaced it by adding MGM Resorts (MGM). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Black Box Trader: The portfolio replaced three names in this week’s adjustment, which comes a day later than usual due to Presidents’ Day. The positions that were sold today included:
• Darling Ingredients (DAR, +3.6%)
• Tenet Healthcare (NYSE:THC, +3%)
• Diebold Nixdorf (DBD)
The new buys that filled these open spots are:
• Spirit Airlines (SAVE)
• TEGNA (TGNA)
• Tempur Sealy (TPX)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Until Tomorrow,
Jim Giaquinto
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