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Three consecutive days of gains is a pretty good run at a time of such uncertainty, so it’s not much of a shock that the market took a break on Tuesday.
However, the declines were modest, especially when you consider advances of more than 1% for each of the major indices in the previous two sessions.
The S&P slipped 0.48% to 3335.47, while the Dow also declined by 0.48% (or about 131 points) to 27,452.66. But these indices had climbed 3% or more during the winning streak.
The NASDAQ was off 0.29% (or around 32 points) to 11,085.25, after jumping more than 4.5% in the previous three sessions.
This nice run will certainly make September look a lot better than previously feared. However, its still likely to be the first losing month for the market since March.
Heading into the final day of the month tomorrow, the NASDAQ is down more than 6% for September, the S&P is off nearly 5% and the Dow has slipped approximately 3.5%.
The market shrugged off a strong consumer confidence report on Tuesday. The number soared to 101.8 points in September, which was up more than 15 points from the previous month.
It was the biggest gain since 2003, and suggests that people are feeling pretty good about the economy despite all the challenges out there.
This report is just the tip of the iceberg for a big turn-of-the-month data week. The ADP employment report comes tomorrow. The past two numbers have been big misses, but the market hasn’t cared much.
Thursday brings ISM Manufacturing, which has been above 50 (expansion) for the past several months. The session will also see construction spending and jobless claims (as usual).
And then comes Friday and the next installment of the government employment situation. Last month, the economy added 1.37 million jobs and the unemployment rate was back in the single digits at 8.4% for the first time in the pandemic era.
Today's Portfolio Highlights:
Large-Cap Trader: It was time for a “refresh exercise” in the portfolio, so John swapped out three names on Tuesday. He began by selling Dollar General (NYSE:DG, +9.8%), Northern Trust (NASDAQ:NTRS) and Leidos (LDOS). Then the editor filled these spots with the following buys:
▪ Best Buy (BBY) – consumer electronics giant
▪ Kimberly Clark (NYSE:KMB) – consumer products staple
▪ Owens Corning (NYSE:OC) -- building materials systems and composite solutions
BBY is a Zacks Rank #1 (Strong Buy), while KMB and OC are Zacks Rank #2s (Buys). They are all off their highs, which provides plenty of running room moving forward. They also registered impressive earnings surprises in their most recent quarters and come from highly-ranked industries. John added each stock today with an allocation of around 5%. Read his complete commentary for more specifics on today’s moves.
Stocks Under $10: Hungry for profits? What about tacos? Brian has found a way to satisfy both of those cravings by adding Del Taco Restaurants (NASDAQ:TACO), the country’s second-largest Mexican-American QSR chain by units. The past two quarters included impressive beats of 100% and 50%, while rising earnings estimates pushed the company to Zacks Rank #2 (Buy) status. With several states continuing to open, the editor thinks TACO will see more growth moving forward. Read the full write-up for more on this new addition. In other news, this portfolio had a couple top performers on Tuesday with Digital Turbine (NASDAQ:APPS, +6.4%) and Harmonic (NASDAQ:HLIT, +5.2%).
Zacks Short List: Big adjustment this week as the portfolio swapped out seven names. The stocks that were short-covered on Tuesday included:
▪ V.F. Corp. (VFC, +6.2%)
▪ TAL Education (TAL, +0.9%)
▪ Netflix (NASDAQ:NFLX, +0.2%)
▪ StoneCo (STNE, +x%)
▪ XPO Logistics (NYSE:XPO)
▪ Nike (NYSE:NKE)
▪ Sunrun (NASDAQ:RUN)
The new buys that filled these spots were:
▪ BioMarin Pharma (BMRN)
▪ Burlington Stores (NYSE:BURL)
▪ China Lodging (HTHT)
▪ Illumina (NASDAQ:ILMN)
▪ Las Vegas Sands (NYSE:LVS)
▪ Performance Food (PFGC)
▪ Sysco (NYSE:SYY)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Until Tomorrow,
Jim Giaquinto
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