SPECIAL ALERT: Remember, the latest episode of the Zacks Ultimate Strategy Session will be available for viewing no later than this Wednesday, August 11. Kevin Matras, David Bartosiak, Neena Mishra, CFA, FRM, and Sheraz Mian will cover the investment landscape from several angles in this informative event.
Don’t miss your chance to hear:
▪ Sheraz and Neena Agree to Disagree on whether inflation worries are overblown
▪ Kevin answers your questions in Zacks Mailbag
▪ Sheraz and David choose one portfolio to give feedback for improvement
▪ And much more
So be sure to mark your calendar then log on to Zacks.com and bookmark this page.
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Excitement over the impressive jobs report waned a bit over the weekend, making the mixed Monday session a mirror image of Friday’s. Meanwhile, investors are preparing for some noteworthy inflation indicators later this week as earnings season and concerns over the delta variant continue.
When last we left you, the market was celebrating a much better than expected Government Employment Situation report. To recap: the economy added 943K jobs in July, which easily beat expectations and drove the unemployment rate down to 5.4%. The end result was new records for two of the major indices, while the NASDAQ suffered a loss.
But the reverse happened on Monday.
The tech heavy index was the only one to finish in the green this time, as the NASDAQ rose 0.16% (or about 24 points) to 14860.18 (which is now just 35 points from a record). Meanwhile, the Dow was off 0.30% (or around 106 points) to 35,101.85 and the S&P slipped 0.09% to 4432.35. These latter two indices both reached new highs on Friday in the aftermath of the jobs report.
Investors were so happy with the 943K print that they focused more on the economic recovery than the Fed reaction. Recovery stocks were on the rise, while tech took a backseat. But now we’re worrying again about the delta variant, a sooner-than-expected taper announcement and rising inflation. Fortunately, we also have a very solid earnings season that will continue this week and next.
The big news over the next few days will be inflation, as the CPI is scheduled for Wednesday and the PPI is set for Thursday. These reports were both higher than expected when last reported in mid-July. The CPI rose 5.4% (vs. expectations of 5%) and the PPI was up 1% (vs expectations of 0.6%). The Fed says this rising inflation is only transitory, so these upcoming reports will be interesting.
It looks like another busy week ahead...
Today's Portfolio Highlights:
Insider Trader: Prices for chemicals and energy have come down from recent highs, but these areas should be big winners as the economy continues to reopen. Perhaps that’s why a director at DuPont (NYSE:DD) bought 5,000 shares last week on August 5. Shares of this large-cap specialty chemicals company are down 8% in the last three months. Tracey thinks this insider buy is a “strong statement” since this director didn’t buy at all in 2020 and already is given thousands of shares in awards. The editor added DD on Monday with a 10% allocation, while also selling 8x8 (EGHT) after running in place since its quarterly report. Read the full write-up for more. By the way, this portfolio had a top performer today as Aspen Group (NASDAQ:ASPU) rose 4.5%.
Counterstrike: Here’s a couple classic counterstrike plays to begin the new week. Jeremy added Groupon (NASDAQ:GRPN), a website that specializes in daily discount deals, and The Container Store (TCS), a retailer that specializes in storage and organization products. Both of these names came off their post-earnings highs and are now right in the editor’s wheelhouse. GRPN beat by 197% in its most recent quarter and has potential to bounce after plunging almost 20 points lower. TCS is a Zacks Rank #1 (Strong Buy) that demolished earnings expectations by 300%... and then sold off before stabilizing around $11. Jeremy added GRPN with a 5% allocation and TCS with a 10% allocation. Read the full write-up for more specifics on these moves.
Surprise Trader: Morgan Stanley (NYSE:MS) just initiated coverage on Maxeon Solar (MAXN), a designer, manufacturer and seller of solar panels. That’s part of the reason why Dave added this name on Monday, but he’s been watching this stock for a while now and wants to get in before its next quarterly report. The company has an Earnings ESP of 8.3% for the release coming after the bell on Thursday, August 12. MAXN beat by nearly 27% last time and is expected to generate earnings and sales growth of 49.3% and 60%, respectively, next year. The editor added MAXN today with a 12.5% allocation, while also getting out of Ruth’s Hospitality (RUTH) to make room for more ideas. Read the full write-up for more.
Black Box Trader: The portfolio cashed in a double-digit winner among four overall changes for this week's adjustment. The stocks that were sold today included:
• Nucor Corp. (NYSE:NUE, +20.5%)
• Antero Resources (NYSE:AR)
• OneMain Holdings (NYSE:OMF)
• Ford (F)
The new buys that filled these spots were:
• CBRE Group (NYSE:CBRE)
• Mattel (NASDAQ:MAT)
• Option Care Health (NASDAQ:OPCH)
• Textron (NYSE:TXT)
Read the Black Box Trader’s Guide to learn more about this computer-driven service.
Until Tomorrow,
Jim Giaquinto
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