Stocks dipped sharply in the final hour of trading on Tuesday, as tech regressed from yesterday’s bounce and the busiest week of earnings season continued.
One day after leading the market higher and starting this week on positive footing, tech stocks returned to their recently-underperforming ways and slid into the background.
As a result, the NASDAQ was easily the biggest loser with a decline of 1.27% (or about 134 points) to 10,402.09. The pullback nearly wiped out Monday’s 1.67% advance.
All of the FAANGs were lower again. Each of them declined more than 1%, led by Alphabet (NASDAQ:GOOGL) (GOOG, -1.95%), Amazon (NASDAQ:AMZN, -1.8%) and Apple (NASDAQ:AAPL) (-1.64%). It just so happens that these three names are all reporting after the bell this coming Thursday.
The Dow lost 0.77% (or about 205 points) to 26,379.28 and the S&P was off 0.65% to 3218.44. These indices were up 0.43% and 0.74%, respectively, yesterday.
Earnings results were mixed on Tuesday. Pfizer (NYSE:PFE), which has been making encouraging headlines recently about a coronavirus vaccine in collaboration with partner BioNTech, beat second-quarter expectations and raised its guidance. Shares advanced nearly 4%.
However, there were disappointing reports from the likes of 3M (MMM, -4.85%) and McDonald’s (NYSE:MCD, -2.49%).
The big report after the bell came from chipmaker Advanced Micro Devices (NASDAQ:AMD), which raised its full-year revenue guidance. Investors love upward revisions during normal times, but it’s all the better in such a difficult environment.
Shares of AMD are up approximately 10% afterhours, as of this writing.
In addition to another large round of earnings reports tomorrow, we’ll also be hearing from the Fed. Today we learned that their lending programs will be extended to the end of the year, rather than expire at the end of September.
Everyone will be listening to Chair Jerome Powell’s remarks tomorrow, which will certainly include a reiteration that the Fed will do everything it can to keep the economy moving during this pandemic.
And in the background of all this is Congress, and its debate over the next coronavirus relief plan. Senate Republicans unveiled their plan last night, but we might not get any real movement for a while.
We’re all expecting them to get something done sooner or later as current benefits are set to expire, but they’ll probably take as much time as possible to attack each other in this election year. So don’t hold your breath.
Today's Portfolio Highlights:
Surprise Trader: The early days of earnings season are a great time for “quick turnarounds” in this portfolio, because it gives Dave “as many at-bats as possible” during this busy time. He had another one for us today. BG Foods (BGS) is a Zacks Rank #2 (Buy) that reports after the bell on this coming Thursday, July 30. It beat by nearly 7% last time and has an Earnings ESP of 1.56% for the coming report. Current quarter EPS estimates suggest growth of more than 68%. BGS was added on Tuesday with a 12.5% allocation. The editor also sold NETGEAR (NTGR) today for a 14.3% return in just two weeks. Learn more about today’s moves in the complete commentary. In other news, this portfolio had one of the best performers of the day as Turning Point Brands (NYSE:TPB) rose 9.4% after raising its 2020 guidance during its second-quarter report.
Stocks Under $10: Believe it or not, some retailers are actually getting stronger during this pandemic. It all revolves around online sales, of course. Brian added a company on Tuesday that’s getting a lot of growth from this area. Casper Sleep (NYSE:CSPR) manufactures home furnishing products, especially mattresses, pillows, sheets, bedroom furniture, and sleep technology. The company hasn’t been public for long and missed expectations in its first two reports, but rising earnings estimates have made it a Zacks Rank #2 (Buy). The editor sees good growth for CSPR and believes it’s structured to prosper in this difficult environment while other retailers struggle. Read the full write-up for more on this new addition. Meanwhile, this portfolio had a Top 5 performer on Tuesday with SunOpta (NASDAQ:STKL) rising 8.5%.
Zacks Short List: It's almost a brand new portfolio after this week's adjustment as seven names were replaced. The stocks that were short-covered today included:
• Las Vegas Sands (NYSE:LVS, +8.6%)
• Incyte Corp. (NASDAQ:INCY, +6.8%)
• Advanced Disposal Services (NYSE:ADSW)
• NeoGenomics (NASDAQ:NEO)
• Mimecast Ltd. (NASDAQ:MIME)
• Marathon Petroleum (NYSE:MPC)
• NovoCure Ltd. (NASDAQ:NVCR)
The new buys that filled these open spots were:
• Match Group (NASDAQ:MTCH)
• Sunrun (NASDAQ:RUN)
• The TJX Cos. (NYSE:TJX)
• Tiffany (TIF)
• V.F. Corp. (VFC)
• Xylem (NYSE:XYL)
• Yandex N.V. (NASDAQ:YNDX)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
All the Best,
Jim Giaquinto
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