Third Straight Record Close for the Dow

Now the Dow is just showing off after reporting another record close on Wednesday, while its counterparts just can’t seem to get anything going this week… yet.

The Dow climbed another 0.29% (or about 90 points) to 31,613.02, marking its third straight session with an all-time high. Meanwhile, the S&P was once again just below the flatline with a slide of 0.03% to 3931.33, and the NASDAQ continues to lag behind the pack with a loss of 0.58% (or 82 points) to 13,965.50.

Retail sales for January jumped by 5.3%, which slaughtered expectations for a gain of just over 1% and snaps several months of weak results.

Apparently, consumers really appreciated those $600 checks as part of the last stimulus package. It’s no wonder the market is rooting for the $1.9 trillion stimulus deal that’s rattling around Washington right now, which could include checks up to $1400.

The thing about jittery investors, though, is that every positive report can be considered a double-edged sword. The number was great, but it could also be a signal that the market is overheating and moving toward a sharp correction. As if that weren’t enough, today’s skyrocketing PPI suggests that inflation is on the rise.

An overheating market and rising inflation are two things that could convince the Fed to finally make a move after its historic support of the economy. But investors might want to calm down.

Minutes from the most recent meeting show that the Committee isn’t even thinking about raising rates right now. The economy’s goals are still far from being achieved, so they plan to stay as accommodative as possible until things get back on track… and that could still take a while.

“My takeaway is that the Fed sees any inflation number as temporary and mostly due to supply constraints. They think that it will be a while before they will act. Going forward this language on inflation will be a key element we will have to watch,” said Jeremy in today’s Counterstrike.

Getting back to retail, the industry’s biggest player will be reporting on Thursday as Walmart (NYSE:WMT) goes to the plate. With earnings season winding down, a lot more retailers will be taking the stage in the days ahead. We’ll also be getting jobless claims tomorrow...

Today's Portfolio Highlights:

Headline Trader: The hottest and quickest way to go public these days is through a SPAC (or special purpose acquisition company). For his fourth buy in the past two days, Dan is getting into this space by adding Foley Trasimene Acquisition (WPF), which will be merging with Alight Solutions to bring that leading HR cloud provider public with an enterprise value of $7.3 billion. This move is a play on the risk-appetite for new public companies, which stands at a 20-year high right now! It’s also a great way to pick up a next-generation cloud software provider with “unparalleled” revenue stability and visibility. The editor thinks it’s at a good price compared to the broader cloud software market... and especially considering its potential for the future. Get Dan’s specifics on this new addition in the full write-up.

Home Run Investor: The past few weeks have seen shares of Donnelley Financial Solutions (NYSE:DFIN) jump to more than $22 from $18, so Brian thought this was a good time to cash in this Internet software name. He sold DFIN on Wednesday for a more than 23% return in a little over two months. Meanwhile, the new addition is Kulicke & Soffa (KLIC), which provides semiconductor packaging and electronic assembly solutions. The company has beaten the Zacks Consensus Estimate in three of the past four quarters. But the editor was most impressed that earnings estimates for this fiscal year and next have surged over the past month, which explains KLIC’s status as a Zacks Rank #1 (Strong Buy). Brian also likes its valuation and rising margins. Read the full write-up for more on all of today’s action. In other news, this portfolio had a top performer on Wednesday as MarineMax (HZO) climbed 5.3%.

Surprise Trader: The game plan at Brigham Minerals (NYSE:MNRL) lately seems to be buying up distressed assets in the Permian Basin from small, private owners. Dave likes the theory, but for this portfolio he’s more impressed with the positive Earnings ESP of 36.67% for the quarter coming after the bell on Wednesday, February 24. This Zacks Rank #2 (Buy) mineral acquisition company beat by 200% last time. The editor added MNRL on Wednesday with a 12.5% allocation, while also selling the “tired” Bunge (NYSE:BG) position for a 9.5% return in less than two weeks. Read the full write-up for more.

Technology Innovators: For the second consecutive quarter, Cornerstone OnDemand (CSOD) managed to report a triple-digit positive surprise yesterday. It earned 64 cents in the fourth quarter, which beat the Zacks Consensus Estimate by more than 128%. The company topped expectations by over 142% in the previous quarter, while also surprising by more than 50% in the second quarter. Revenue was also better than expected for CSOD, which is a software-as-a-service name that focuses on learning management, enterprise social networking and performance management. Shares of CSOD soared by more than 19% today, which made it the top performing stock among all ZU services.

Until Tomorrow,
Jim Giaquinto