S&P Begins July With Sixth Straight Record Close

The market just kicked off a whole new quarter and half on Thursday, but the action (or lack thereof) is anything but new. And that’s all right! It means that stocks continue to grind upward and reach all-time highs while waiting for a direction, which may or may not come with the big jobs report tomorrow.

The S&P rose 0.52% to 4319.94 today, marking its first close above 4300 ever and its sixth straight session in record territory. The Dow climbed 0.38% (or about 131 points) to 34,633.53, while the NASDAQ increased 0.13% (or about 18 points) to 14,522.38. Each of these indices are in the green for the week heading into Friday’s session.

However, investors are still patting themselves on the back for an impressive first-half performance with double-digit gains for all major indices. The S&P was up 14.4%, while the Dow advanced 12.7% and the NASDAQ improved 12.5%. Second-quarter performances were all solidly positive as well, but not to the same extent since stocks have gotten a bit lazy here in the summer months.

Perhaps that will change tomorrow with the Government Employment Situation report, which is undoubtedly the biggest news of the week. Expectations are for around 680,000. Last month was one of those so-called ‘goldilocks’ reports that showed substantial improvement from the previous print, but not enough to change the Fed’s policy.

“Outside a big beat or miss, I don’t have high expectations for a decent pickup in volume ahead of the holiday weekend,” said Jeremy Mullin in Counterstrike. “If I had to guess, we see a beat, but not by much. This scenario will allow the market to pretty much do what it did today and grind to new highs.”

We’ve already received a couple solid employment reports this week. Today’s jobless claims print of 364,000 was better than expected and improved by approximately 50K from the previous week. The result was also below 400K for the first time since early June. And yesterday’s ADP employment report showed that private payrolls added 692K in June, which beat expectations but was down from the previous month.

Of course, this data week is more than just employment numbers. The ISM Manufacturing report came to 60.6 for June, which missed expectations… but only by 0.3. In other words, it was pretty much as expected and is still easily in expansion territory (which is anything above 50). Also, the CBO raised its GDP estimate to 7.4% by the end of 2021 and 2.8% a year through 2025.

Another jobs report that threads the needle would be a great way to start the three-day, July 4th weekend. Let’s see what happens.

Today's Portfolio Highlights:

Technology Innovators: Vegas is back, baby! People are venturing out again now that the pandemic is on the ropes, and a lot of them are heading toward Sin City. The casinos are looking to spruce things up as the gamblers return, which will include new slot machines. That’s great news for International Game Technology (NYSE:IGT), which makes one-armed bandits and other types of casino-style gaming equipment. The company is a Zacks Rank #1 (Strong Buy) thanks to rising earnings estimates and has beaten the Zacks Consensus Estimate in three of the past four quarters. With uncertainty clearing up for casinos, Brian expects a lot more investment in the space. And that means more business for IGT. Read the full write-up for a lot more on this new addition. By the way, this portfolio had the best performer among all ZU names today as Grid Dynamics Holdings (NASDAQ:GDYN) jumped 25.1%.

TAZR Trader: For the second time this week, Kevin sold a little bit of The Trade Desk (NASDAQ:TTD) for a double digit return. With estimates stalled and the stock exceeding targets, the portfolio made 54.3% on today’s haircut. The editor sold a bit of this digital-advertising platform operator this past Monday as well for more than 60%. Kevin was adding onto his TTD position in May when shares dropped despite a strong quarter and stock split, and now its time to cash in. Meanwhile, Kevin also bought a 5% position in semiconductor memory giant Micron (NASDAQ:MU) after a solid report and outlook. Read the full write-up for more on today's action.

Income Investor: “As we’ve seen in years past, strong first halves of the year bode well for the second half—2021 looks to follow that rule, despite the bouts of volatility we’ve experienced so far. All three major indexes ended H1 up by double digits, and the small-cap Russel 2000 rallied 17% thanks to the rotation into value stocks we’ve seen in the first six months of the year.

“What’s on the docket for H2?

“Well, I think that it will all depend on the rate of recovery (which isn’t too different from the market environment seen in the first half of 2021). If inflation fears calm down and bond yields remain low, it’s likely that high growth and tech stocks will lead the market higher. But correction fears could intensify if strong economic data stirs up inflation concerns, which could lift cyclical, value, and smaller cap stocks.

“Whatever happens, always remember—diversification is your friend.” – Maddy Johnson

Until Tomorrow,
Jim Giaquinto