Stocks Stall Ahead of Fed

With a big Fed statement scheduled for tomorrow, the major indices weren’t in the mood to continue their record-breaking pace on Tuesday. And weak retail sales for February didn’t help.

The Dow slipped 0.39% (or about 127 points) to 32,825.95, which snaps a long run of success that included four straight days of record highs and seven sessions in the green. The S&P was off 0.16% to 3962.71, ending a three-day run of new highs.

The NASDAQ managed to add onto yesterday’s more than 1% advance… but only barely. The tech-heavy index was up 0.09% (or just about 12 points) to 13,471.57. All of the FAANGs were higher, especially Facebook (NASDAQ:FB, +2.02%), Apple (NASDAQ:AAPL, +1.27%) and Alphabet (NASDAQ:GOOGL) (GOOG, +1.26%). Microsoft (NASDAQ:MSFT) was also up by more than 1%.

Investors will be all ears tomorrow when Fed Chair Jerome Powell makes his statement after the Committee’s two-day meeting. There’ll be no policy changes on Wednesday, but that doesn’t mean his comments won’t move the market.

With the 10-year Treasury yield still well above 1.6% for a third straight session, the market remains concerned that an economic boom and increased inflation may force the Fed to unwind its policy sooner than expected. What is Mr. Powell going to say about these important issues that are on the minds of most investors?

He might not say very much at all, actually. So the market will have free rein to latch onto any change (or lack thereof) from his previous statements. We could get a bumpy ride tomorrow.

In other news on Tuesday, retail sales for February were down 3%, which was much worse than expectations for only a 0.5% dip. The result was also a big step down from January’s surge of 7.6% (revised up from 5.3%), which snapped several months of misses.

There’s a good chance, though, that this weakness will be short lived. The weather was pretty cruel in areas last month and consumers will have 1400 more reasons to spend in the weeks ahead.

Today's Portfolio Highlights:

Stocks Under $10: The portfolio swapped out a global satellite data communications company for an industrial name that makes farm equipment. That’s quite a change! Shares of ORBCOMM (ORBC) have enjoyed a “decent recovery” of late, so Brian decided this was a good time to sell the position and collect a 9% return in a little over two months. The new buy is Titan International (NYSE:TWI), a Zacks Rank #2 (Buy) that manufactures off-highway wheels, tires, assemblies and undercarriage products. It has beaten the Zacks Consensus Estimate in each of the last four quarters with an average positive surprise of 32% over that time. Earnings estimates for this year have been improving and could easily flip to the green in the coming months. Read the full write-up for a lot more on today’s moves.

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Counterstrike: Shares of The RealReal (NASDAQ:REAL) sold off after this online marketplace for consigned goods missed the Zacks Consensus Estimate by 29% in its most recent report. The stock has bounced back to its 50-day lately, but Jeremy thinks it could re-test those recent lows. Therefore, he short sold REAL on Tuesday with a 4% allocation. Meanwhile, the editor doesn’t want to hold onto BlackBerry (NYSE:BB) into its March 30 earnings release anymore, since this security software & services company keeps giving back its advances. The portfolio sold BB today but secured an impressive 54.9% return in a little over two months. FedEx (NYSE:FDX) was also sold today on concerns that bad weather may have impacted its results. It was up 2.7% in a little over a month. Read the full write-up for more.

Zacks Short Sell List: Two positions were changed in this week's adjustment. The stocks that were short-covered included Las Vegas Sands (NYSE:LVS) and Penn National Gaming (NASDAQ:PENN), while the new buys that replaced these names were Shift4 Payments (FOUR) and Shopify (NYSE:SHOP). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

Until Tomorrow,
Jim Giaquinto

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