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Stocks drifted higher on Tuesday in a rather calm session that extended winning streaks for each of the major indices.
It almost felt like a normal slow summer session today, but there’s really nothing normal about things right now. We’re still waiting for Congress to pass a new coronavirus relief package and hoping for a vaccine to eventually open up this economy for real.
However, earnings season and even the economic data have been pretty good of late, which kept market sentiment positive enough to continue the upward momentum.
The Dow advanced 0.62% (or about 164 points) to 26,828.47, while the S&P was up 0.36% to 3306.51. These indices each have three-day winning streaks.
The NASDAQ had to play some catch-up on Tuesday after leading the market since last Thursday’s epic and positive Big Tech earnings reports. The index slipped into the red a few times today, but a late surge helped it gain 0.35% (or around 38 points) to 10,941.17.
While it underperformed its counterparts, the NASDAQ did finish at a new closing high for the second straight day and has a five-day winning streak.
One of the big reports after the bell was Disney (DIS), which has really been battered by the coronavirus. Theme parks are not too popular these days. However, the stock did report a surprise profit per share and solid streaming subs.
Shares of the company are up 4.4% afterhours, as of this writing.
We’re still waiting on the next round of coronavirus relief even though the previous plan has expired. However, now we’re hearing about productive meetings and progress being made, so apparently its time to get to work after the customary few news cycles of calling each other names.
The market apparently expects something relatively soon, or we wouldn’t be drifting higher like today.
Today's Portfolio Highlights:
Surprise Trader: The portfolio swapped out food companies on Tuesday. Dave sold BG Foods (BGS) for an 8.3% return in one week. Upside potential is greater for a company that has yet to report earnings, so he filled that open position with TreeHouse Foods (NYSE:THS). This Zacks Rank #2 (Buy) has beaten the Zacks Consensus Estimate in the past two quarters and has a positive Earnings ESP of 4.63% for the quarter coming before the bell this Thursday, August 6. THS was added with a 12.5% allocation. Read the full write up for more on these moves.
Healthcare Innovators: Despite beating expectations by 18% on the top line and 25% on the bottom in its recent report, Neurocrine Biosciences (NASDAQ:NBIX) is getting mixed reviews from analysts. Kevin sees this as an opportunity to add an “amazing” biotech growth story at a fair discount to long-term growth rates. This Zacks Rank #1 (Strong Buy) specializes in neurological and endocrine-related diseases. It’s no stranger to the portfolio since it brought gains of 19% last year. The editor likes the risk/reward set-up for NBIX and would be open to adding more on a pullback. Read the complete commentary for a lot more on this new addition, including a close look at the what analysts are saying. By the way, this portfolio had a top performer on Tuesday as Anavex Life Sciences (NASDAQ:AVXL) rose 8.6%.
Stocks Under $10: At this time of social distancing, self-checkout lanes are very popular at grocery stores and other retailers. Even fast food places like McDonald’s (NYSE:MCD) have machines taking your order these days. Therefore, Brian thinks that Diebold Nixdorf (NYSE:DBD) will be a good investment right now. This Zacks Rank #2 (Buy) is in the business of ATMs and retail point-of-sale machines. The company beat the Zacks Consensus Estimate by more than 1000% in its most recent quarter. That’s not a typo! And earnings estimates for 2020 have skyrocketed to a profit of 49 cents from a loss of 49 cents in 60 days. The editor added DBD on Tuesday. Read the full write-up for more on this new pick.
Zacks Short List: This week's adjustment included only one swap. The portfolio sold Twitter (TWTR) and replaced it by adding XPO Logistics (NYSE:XPO). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Counterstrike: "The drive of market direction is Washington DC and when this is the case, markets can get pretty indecisive as politicians release mix messages. The market wants more stimulus and relief packages and the momentum seems to be going in the right direction, albeit slowly.
"However, we keep getting negative commentary including today when Sec Perdue commented that the stimulus talks might take another two weeks. This headline brought some selling into the close, but the bulls quickly bought it up. Market participants are likely waiting on clarity of a deal before committing to the market going higher or lower.
"Boring day outside of some earnings moves. The market is slowly grinding higher, which can lead to sleepy action. However, it is summer and I think after the crazy yeah so far, the market and its participants are taking a well-deserved breather." -- Jeremy Mullin
All the Best,
Jim Giaquinto
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