Stocks fought back from another lower open on Friday, but it wasn’t enough to save the whole week as the plunges on Tuesday and Wednesday proved too severe to overcome.
There was no break from negative economic data today, as retail sales for April plunged 16.4%. That was way more than expectations of around 12.3%.
And it didn’t help that the White House wants to block semiconductor shipments to China’s Huawei, sparking flashbacks to the trade war on top of all the challenges from the coronavirus.
Nevertheless, the market recovered from these headwinds and finished higher by the close for the second consecutive session.
The NASDAQ was the leader of the pack again by advancing 0.79% (or nearly 71 points) to 9014.56. The S&P (NYSE:SPY) rose 0.39% to 2863.70.
The Dow recovered from a more than 260-point loss at its worst and finished higher by 0.25% (or around 60 points) to 23,685.42.
Despite the rough sales data for last month, retail bounced back along with the rest of the market. Perhaps it was aided by a stronger-than-expected reading for consumer sentiment in early May of 73.7, compared to the previous month’s 71.8.
Also, the House is looking to pass a $3 Trillion relief package today. This legislation certainly won’t pass the Senate as-is, but the market hopes this is the beginning of more aid for an economy that has lost approximately 36.5 million jobs in 2 months.
These two days of rebounds, however, weren’t enough to offset sharp losses from earlier in the week.
The Dow lost more than 2.5% over the past five days, while the S&P slipped more than 2% and the NASDAQ declined about 1.2%.
That’s a far cry from last week’s strong performances, which included a 6% surge for the NASDAQ.
But the market’s mood soured a bit since then, sparked by rough economic data, nervousness over economic re-openings around the country, and especially very cautious statements from Fed Chair Jerome Powell on Wednesday.
So we had a sharp selloff this week for those concerned that the market was too hot amid all the terrible economic data, but we also got a couple days of rebounds that kept stocks from falling off another cliff.
No one knows what will happen next week in this unpredictable environment, but it’s a good guess that earnings reports from some of the biggest retailers will play a part.
We’ll be closing out the season with reports from Home Depot (NYSE:HD) and Wal-mart (WMT) on Tuesday, Lowes (LOW) and Target (NYSE:TGT) on Wednesday, and Best Buy (BBY) on Thursday, among many others.
Today's Portfolio Highlights:
Blockchain Innovators: One of the things in this portfolio’s wishlist was a blockchain play in China… and Dave thinks he’s found one with 21Vianet (VNET). This Zacks Rank #2 (Buy) is that country’s largest carrier-neutral Internet data center service provider. It’s partnership with IBM (NYSE:IBM) brought “a comprehensive set of blockchain and IoT series to China’s burgeoning developer community”, according to the company. The editor likes what he sees with VNET, including its position in the Top 10% of the Zacks Industry Rank as part of the Internet – Services space. He also sold Booz Allen Hamilton (NYSE:BAH) on Friday. Read the full write-up for more on today’s moves.
Counterstrike: When the market started rebounding today after opening lower, Jeremy saw an opportunity to add to three existing positions in preparation of larger up moves to come. Therefore, he added 5% each to Teladoc Health (NYSE:TDOC), Dominos Pizza (DPZ) and Spotify Technology (NYSE:SPOT). These names were all added in late April/early May and are now full positions. “Bulls defended the 2800 level and helped salvage the week. The range seems to be setting up nicely, with 2750 as support and 2950 as resistance. We will see next week if there is choppy trade or if we test one of the extremes again,” said the editor. See the full commentary for more on today’s action, including a look at their charts.
Surprise Trader: The aerospace industry has been absent from this portfolio all season, but Dave rectified that on Friday with the addition of CAE (NYSE:CAE). This company is a world leader in providing simulation and modeling technologies to the civil aviation industry and defense forces around the world. It has a positive Earnings ESP of 11.24% for the quarter coming before the bell next Friday, May 22. The editor added CAE with a 12.5% allocation, while also selling Esperion Therapeutics (NASDAQ:ESPR) for a more than 11% return in just 10 days. Get more details on today’s moves in the complete commentary.
Marijuana Innovators: This portfolio led the top movers list on Friday with the two best performances among all ZU services... and both were double-digit performers. Those strong results came from HEXO Corp. (NYSE:HEXO, +21.45%) and Canopy Growth (NYSE:CGC, +14.4%).
Home Run Investor: The portfolio had a busy session to end the week with a sell and two buys. Brian got out of long-haul truckload carrier Marten Transport (NASDAQ:MRTN) to secure a nice gain of more than 38% in less than two months. The new buys are both Zacks Rank #1s (Strong Buys). Domo (NASDAQ:DOMO) is an enterprise software company with a short interest position of just about 10% of the float. Therefore, the smart shorts will be covering if the market moves higher from here. The other buy is SpartanNash (SPTN), which is a grocery store play that will help diversify the portfolio. DOMO reports on June 4 after the close, while SPTN goes to the plate on May 27. Read Brian’s complete commentary for more on these moves.
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