S&P, NASDAQ Close at Record Highs Ahead of Jobs Report

The market may be a bit nervous about the jobs report tomorrow, but that didn’t keep stocks from continuing to grind higher on Thursday and set a couple new closing highs. A better-than-expected jobless claims report helped keep things in the green before the big event.

The S&P rose 0.28% to 4535.95 and the NASDAQ advanced 0.14% (or nearly 22 points) to 15,331.18, which marks record closing highs for both indices. They had both made history this past Monday as well in the wake of Fed Chair Jerome’s Powell’s comments at the virtual Jackson Hole meeting.

But the biggest gainer on Thursday was the Dow, which hasn’t come along on the record-breaking ride but advanced by 0.37% (or more than 130 points) in the session to 35,443.82. The result snapped three days of losses.

Just like last week, the big news comes on Friday with the Government Employment Situation scheduled for release tomorrow morning. Expectations are for approximately 720K jobs being added, which would be a step down from the previous month’s blockbuster result of 943K.

However, a report in that neighborhood or better might be the final straw that starts the Fed to scale back on its super easy monetary policy. But, as highlighted in the Jackson Hole remarks last Friday, a tightening of the monthly bond purchases does not mean that interest rate hikes are close behind.

"We will get the jobs number tomorrow, which will give the Fed an idea on where we are on unemployment. This number will be an indicator of how quickly the Fed will both taper and raise rates," said Jeremy Mullin in Counterstrike. "The expectations is that tapering will be moderate and the market is ok with that. Rising rates are well into the future, but a hot number could change that idea."

But let’s not get ahead of ourselves.

Instead, let's focus on the weekly jobless claims, which provided a nice appetizer for tomorrow’s number. The print came in at 340K, slightly better than expectations at 345K and marking a new pandemic-era low.

It was a welcomed bounce back from yesterday’s disappointing ADP employment report, which stated that private payrolls added only 374K jobs last month. The result was well off of expectations for more than 600K.

But neither of these reports should be considered a harbinger for what’s coming tomorrow. So get ready for a potentially hectic session before the long Labor Day weekend.

Today's Portfolio Highlights:

Blockchain Innovators: Sometimes it’s a surprise to find out how a company employs blockchain technology, and then other times its self-evident. You can put ScanSource (NASDAQ:SCSC) in the latter camp. It’s a value-added distributor of specialty technologies, including automatic identification and point-of-sale products, as well as business telephone products. For a company that develops new technologies, blockchain is essential. And it’s certainly been working for SCSC. The Zacks Rank #2 (Buy) topped the Zacks Consensus Estimate for five straight quarters now. EPS growth for this year is forecasted at 14.6%, while next year should rise to 17.7%. If the earnings trend continues, Dave wouldn’t be surprised to see SCSC get back to 2017 highs near $45. The editor also sold Air Transport Services (NASDAQ:ATSG) today for 37.9% to make room for new opportunities. Read the full write-up for more on today’s moves.

Commodity Innovators: The portfolio added Cabot (NYSE:CBT) Oil & Gas Corp. (COG) and Rayonier (RYN) on Thursday. COG is a Zacks Rank #1 (Strong Buy) natural gas play, which should benefit from higher prices in the winter months. It has a great-looking chart and a 2.7% dividend. RYN is a timberland REIT that held up well during the lumber selloff and beat the Zacks Consensus Estimate by 120% last quarter. This Zacks Rank #2 (Buy) has a dividend of almost 3% and should benefit on any rebound in lumber prices. Jeremy considers COG to be a mid-term stock, while RYN is a long-term. Read the full write-up for more specifics on these moves.

Options Trader: Coming out of the pandemic, sales at American Express (NYSE:AXP) have been slower than other payment processors. “I think its top heavy right now,” said Kevin. “And their chart suggests it might be getting tired.” Therefore, the editor bought to open a December 160.00 Put in AXP. He notes that this is a riskier trade, so use caution and get all the specifics on this move in the complete commentary.

Surprise Trader: Taking some profits from a soaring stock is never a bad idea, so Dave sold half of DICK’S Sporting Goods (DKS) on Thursday for a nice return of more than 35% in just two weeks. On August 25, the company reported its fifth straight positive surprise (and 15th beat out of past 16 quarters) and raised its fiscal 2021 view. Now the portfolio gets a nice profit and lets the rest run to harness any further upswings. The editor also sold all of sidewinder Ulta Beauty (NASDAQ:ULTA) for 1.6% in a little over a week and all of Designer Brands (NYSE:DBI) since “the sellers have taken control”.

Headline Trader: After breaking Dan’s price target this morning, the editor decided to sell Equinix (NASDAQ:EQIX) for a more than 35% return in less than six months. Furthermore, tomorrow’s jobs report presents “a slippery slope” for the world’s largest data center REIT, since it is inversely correlated to interest rates. The editor also got out of Virtu Financial (NASDAQ:VIRT) after it broke through a critical support level.

Zacks Top 10 Stocks: This portfolio had the best performer among all ZU names on Thursday as Quanta Services (NYSE:PWR) climbed approximately 12%. The company announced today that it entered into a definitive agreement to acquire Blattner Holding Company, a leading utility-scale renewable energy infrastructure solutions provider. The deal would increase PWR’s exposure to renewable energy markets, such as wind, solar and energy storage. PWR is a Zacks Rank #2 (Buy) provider of specialty contracting services, and one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry. It is the second-best performer in the portfolio with a gain of nearly 67% since being added on January 4.

All the Best,
Jim Giaquinto

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