If it weren’t for all the new highs, you could call this a boring week for the market. Two of the major indices grinded higher and set fresh records throughout the period, yet their weekly advances were less than 1% amid a deluge of economic data and earnings reports.
The S&P was the best performer on Friday with a mighty rise of 0.16% to 4468, while the Dow increased 0.04% (or about 15 points) to 35,515.38. That makes four consecutive days of record highs for both indices, yet advances of only 0.7% and 0.9%, respectively, for the week. The NASDAQ was also up 0.04% (or around 6 points) to 14,822.90 today, giving it a tiny loss of just under 13 points (or less than 0.1%) for the five days.
We kicked things off on Monday still excited by news that the economy added 943K jobs in July, and then learned that the Senate approved the $1 trillion infrastructure bill. The next two days included inflation indicators (CPI & PPI) that showed prices still rocketing higher, but not as badly as many investors feared. And jobless claims yesterday were acceptable with a decline week over week and the print staying below 400K.
The data deluge continued on Friday, as the University of Michigan consumer confidence number dipped to 70.2 for August. That’s well below expectations and the previous month’s result in the low 80s.
“We could speculate why this is, but I think its simply the combination of the delta variant and inflation headlines,” said Jeremy Mullin in Counterstrike. “We are bombarded with this news and I think the consumer is reacting to that news.”
“Bombarded” is a good word. Yet throughout all the data, stocks grinded higher as the economic recovery seems to be moving along despite the challenges.
And the strong earnings season has certainly helped to keep the market’s spirits up. The number of S&P companies that have beaten earnings and revenue expectations so far remain over 85% for each. Our Director of Research Sheraz Mian continues to analyze the numbers and just posted his most recent Earnings Preview article titled: “3 Things to Know About the Q2 Earnings Season”.
And we’re not done yet, as some of the biggest retailers are set to come to the plate next week. We’ll be seeing reports from the likes of Walmart (NYSE:WMT), Target (NYSE:TGT), Home Depot (NYSE:HD), Lowes (LOW), Deere (NYSE:DE) as well as a few tech stragglers like NVIDIA (NASDAQ:NVDA), Cisco (NASDAQ:CSCO) and Applied Materials (NASDAQ:AMAT).
Over 95% of the S&P will have reported by the end of next week.
Today's Portfolio Highlights:
Surprise Trader: The final addition of the week is Agilent Tech (NYSE:A), which will look to continue its streak of positive earnings surprises when it reports again after the bell on Tuesday, August 17. This Zacks Rank #2 (Buy) is an OEM of a broad-based portfolio of test and measurement products serving multiple end markets. It beat the Zacks Consensus Estimate by 18% last time and has a small positive Earnings ESP heading into next week’s print. Dave added A on Friday with a 12.5% allocation, while also selling the underperforming Rackspace (RXT) and GrowGeneration (NASDAQ:GRWG) positions. See the complete commentary for more on today’s action.
Counterstrike: Shares of F5 Networks (NASDAQ:FFIV) soared to just under all-time highs after a solid quarterly report last month, but has since pulled back in what looks like a technical move down to the 21-day at $200. That makes it a great candidate for this portfolio. FFIV is a Zacks Rank #2 (Buy) provider of multi-cloud application services that beat earnings estimates by 11% recently while also boosting its fourth-quarter outlook. Jeremy added FFIV on Friday with a small 5% allocation with plans to add if the support holds. The editor also sold the stalling Thor Industries (NYSE:THO) for a 10% return in just under two months and half of Ulta Beauty (NASDAQ:ULTA) for 9.7% in about the same amount of time. He also sold Foot Locker (NYSE:FL) ahead of its earnings report next month. Read the full write-up for more on today’s moves and the portfolio in general.
Insider Trader: A nice small cluster buy from a few key insiders at Dun & Bradstreet (DNB) convinced Tracey to add this provider of business decisioning data and analytics on Friday. The company has been around for decades, but it only went IPO last year. Shares are down 32% since the IPO, including a slide of 15% in the wake of the earnings report. But here’s the thing… nobody thinks the earnings report was that bad. So the selloff was overdone and the stock is now a value. Earlier this week, the CEO, the CFO and the Chief Legal Officer all bought shares… and you know how much the editor likes to see the usually-conservative chief lawyer put some money to work. She decided to join the bandwagon and add DNB with a 10% allocation today. Get more specifics in the complete write-up.
Have a Great Weekend!
Jim Giaquinto
Recommendations from Zacks' Private Portfolios:
Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>
Zacks Investment Research