The market ended this lackluster week in the green on Friday, despite growing concerns that the Fed is getting ready to scale back stimulus measures. However, stocks were still lower over the five days amid mixed economic data and worries over the delta variant.
“The market's propensity to keep this bull-drive alive never ceases to amaze me, at least not since this bull-run took hold last year,” said Dan Laboe in today’s Headline Trader.
For the first time this week, the NASDAQ easily outperformed its counterparts as tech suddenly seems a lot more attractive during concerns of slower growth. The index was up 1.19% (or nearly 173 points) to 14,714.66. Meanwhile, the S&P advanced 0.81% to 4441.67 and the Dow increased 0.65% (or almost 226 points) to 35,120.08.
All of the indices were down by well over 1% coming into this session, but the S&P and NASDAQ ended with losses of only 0.6% and 0.7%, respectively, for the week. However, the Dow still slipped approximately 1.1%.
The big news was the Fed minutes for the July meeting on Wednesday, which showed that members are growing more open to the idea of pulling back on their super accommodative monetary policy sooner than most investors would like. Possibly even this year. It certainly shouldn’t come as much of a surprise to anybody, but it was still a disappointment nonetheless.
The Fed will be in the spotlight again next week during the annual Economic Policy Symposium in Jackson Hole, Wyoming. Investors will be watching closely if there’s any more clues on the tapering timeline.
A weaker-than-expected retail sales number for July was also a challenge this week, as the print dropped 1.1% compared to expectations for a loss of only 0.3%. However, yesterday’s jobless claims number was a new pandemic-era low at 348K. And behind all of this data, the waning days of earnings season continues to impress investors and keep their spirits up for the future.
“Our overall take on the Q2 earnings season, which is now in its final phase, has consistently been very positive,” said our Director of Research Sheraz Mian in his latest Earnings Preview article.
“The notable positives in the earnings story include broad-based growth, material momentum on the revenue side and continued positive revisions to estimates for the current period (2021 Q3),” he continued.
These final days of the season are all about retail, such as this morning’s report from Foot Locker (NYSE:FL, +7.3%). Maddy Johnson, editor of Income Investor, breaks it all down in an article titled “Soaring Profits & Even Higher Hopes – Retail Earnings Kick Off with a Bang”. She goes over the reports from heavy hitters such as Home Depot (NYSE:HD), Target (NYSE:TGT), Walmart (NYSE:WMT) and Macy’s (M).
And there’s still some big retailers going to the plate next week, including Best Buy (BBY, Tuesday), Ulta Beauty (NASDAQ:ULTA, Wednesday), DICK’S Sporting Goods (DKS, Wednesday), Dollar General (NYSE:DG, Thursday) and several others.
Today's Portfolio Highlights:
TAZR Trader: Despite today’s rally, Kevin thinks the market will pull back heading into September. So this is a good time to sell into some strength with a name like NVIDIA (NASDAQ:NVDA), which was up another 5.1% today in the wake of a solid quarterly performance from Wednesday. So the editor trimmed that position “just a bit” on Friday and cashed in a profit of more than 280%. Basically, he thinks NVDA will struggle to take out its last two highs... or maybe not. Better to be safe (and profitable) than sorry.
Counterstrike: "We saw the overnight selling once again, but when the bell rang in New York, there wasn’t a seller to be found. Quite an amazing 70 handle grind higher from the overnight lows that put the squeeze on the bears once again. The S&P closed up 0.81%, while the Nasdaq added 1.06%.
"I’m shocked at the market grind again, but we talked about all that cash that is out there being put to work. Any dip is simply bought, regardless of price.
"Today’s action took all the fear out of the market and the VIX dipped back below 19. Additionally, the bears failed to hold levels that should have been held on a bounce. I talked about 4450 being the area bears would be trapped again. I’m sure we will see early next week if the squeeze to all-time highs can continue." -- Jeremy Mullin
Value Investor: "Last year, when we were getting a big winter COVID outbreak, the stock market mostly ignored the case counts and hospitalizations because it was looking forward 6 months, or more. The vaccine was being rolled out and everyone believed the worst of the pandemic would be over by the summer.
"But this current outbreak is a bit different because we already HAVE the vaccine but this outbreak is impacting the global economy as shutdowns are occurring in Asia and, globally, consumers have changed their behavior. Again.
"All of this will be a temporary setback to the ultimate recovery, but the market is now thinking it's going to be a bit rockier 6 months from now than previously believed. Goldman Sach's reduction of Q3 GDP from 9% to 5.5% is a sign of that.
"Both of those GDP numbers, by the way, are tremendous for the US economy. But there is now an acknowledgement that there will be a temporary slowdown." -- Tracey Ryniec
Have a Great Weekend!
Jim Giaquinto
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