The major indices pulled back this week as the market catches its breath after a record-setting run and wonders when Washington will agree on a stimulus package.
The Dow crossed back over 30K on Friday after closing just under that mark yesterday. It gained 0.16% (or about 47 points) to 30,046.37.
But the NASDAQ slipped 0.23% (or nearly 28 points) to 12,377.87, while the S&P declined 0.13% to 3663.46.
For the week, the S&P was down 1% and the Dow was off 0.6%, which put an end to back-to-back weekly advances. The NASDAQ ended a three-week run by dipping 0.7% over the five days.
The Senate passed a one-week government funding extension today, as did the House earlier this week. Assuming President Trump signs the measure, a government shutdown will be averted through Dec. 18.
Unfortunately, that’s the only real progress that Capitol Hill has made this week. They appear to agree that something needs to get done while we wait for the vaccines to do their thing, but it’s only talk for now. The market hopes this extension will give them time to make it happen.
We’ve been getting signs lately that the renewed restrictions amid rising coronavirus cases is having an economic impact.
Most recently, the jobless claims soared past 800K for the first time in nearly two months, while falling well short of expectations and the previous week’s result.
On Thursday, the Pfizer/BioNTech vaccine got one step closer to final approval when an FDA advisory panel recommended it for emergency use. Such news would’ve sent the market through the roof a few weeks ago.
And there’s the problem. All the positive vaccine news has been priced in, though the vaccine itself is still months away from normalizing our lives. In the meantime, the market needs a catalyst to keep moving higher after this record-setting run.
Those folks in Washington are the best chance for that catalyst. Let’s hope it gets done next week.
Today's Portfolio Highlights:
Surprise Trader: Investors have always thought that the rising earnings in the RV space was unsustainable, but Dave believes its part of a paradigm shift. The upcoming quarterly report from Winnebago Industries (NYSE:WGO) should be the latest example that this space isn’t a flash in the pan brought on by covid. The company has crushed the Zacks Consensus Estimate by double digits in the last two quarters and now has a positive Earnings ESP of 14.89% for the quarter coming before the bell next Friday, December 18. Furthermore, WGO is a Zacks Rank #1 (Strong Buy) with a VGM score of “A” that’s part of a space in the top 2% of the Zacks Industry Rank. The editor added WGO on Friday with a 12.5% allocation, while also selling Jack in the Box (JACK) for a 5.8% return in just under a month. Read the full write-up for more.
TAZR Trader: The past couple days have been pretty eventful for Inseego (NASDAQ:INSG). This small-cap “pioneer” in 5G and intelligent IoT device-to-cloud solutions provider announced that its 5G MiFi M2000 mobile hotspot would now be available in Japan, which gives it a much bigger footprint worldwide. This comes a day after T-Mobile selected this as its first 5G hotspot. INSG soared 12.2% on Friday to become the top-performing stock among all ZU names. Infinera (NASDAQ:INFN) also made the Top 5 movers list with a gain of 4.4%.
Value Investor: "Stocks are in a wait-and-see mode as Congress continues to dither about the aid package.
"Somehow it managed to pass a 1-week extension on the budget to avoid a government shutdown but it's no closer to a coronavirus agreement even as the Dec 26 deadline for the end to unemployment looms.
"There are many who believe they positively won't allow that deadline to pass without passing something, but I would remind you all that many thought the same thing about the late July deadline on the extra $600 a week.
"Not only did Congress let the $600 a week expire but they haven't even given it a second thought.
"Anything will be possible next week. This stock market will move on the headlines, once again." -- Tracey Ryniec
Have a Great Weekend!
Jim Giaquinto
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