We enjoyed a strong start to the week on Monday with each of the major indices moving solidly higher, including a more than 1% surge for the NASDAQ as bond yields mellowed a bit.
The tech-heavy index jumped 1.23% (or about 162 points) today to 13,377.54. It has now recovered nearly two-thirds of last Thursday’s 3% plunge. The NASDAQ lost 0.8% last week, marking its fourth losing week in the past five.
The FAANGs were mostly higher, especially Apple (NASDAQ:AAPL, +2.83%) and Netflix (NASDAQ:NFLX, +2.13%). Tesla (NASDAQ:TSLA) and Microsoft (NASDAQ:MSFT) also rose by more than 2% each on Monday.
Furthermore, the S&P was up 0.70% to 3940.59, while the Dow improved 0.32% (or about 103 points) to 32,731.20. These indices are also returning from losing weeks with declines of 0.8% and 0.5%, respectively.
The 10-year Treasury yield, which is taking up a lion’s share of the market’s attention right now, closed below 1.7% for the first time since last Wednesday. If this yield can relax a bit, then so too can the investors.
The Fed was the big news story in the market last week, as Fed Chair Jerome Powell stated that rates are likely to stay put through 2023 despite a raised economic growth forecast for 2021. If you can’t get enough of Mr. Powell & Friends, then you’re in luck!
He’ll be testifying in front of the House Financial Services Committee tomorrow and the Senate Banking Committee on Wednesday. Mr. Powell is expected to walk the same tightrope as last week, reiterating that the recovery is moving along splendidly but there’s still a lot of work to be done to put this pandemic in the rear-view mirror. Therefore, they’ll stay as supportive as possible for the foreseeable future.
So it was a nice start to the week. Of course, we had a nice start to last week as well, and the indices ended with losses. Get ready for another bumpy ride.
Today's Portfolio Highlights:
Surprise Trader: Even with the pandemic on its last legs, the RV space is still hot and in the top 1% of the Zacks Industry Rank. Winnebago Industries (NYSE:WGO) is one of the big names in this space; it's also an old friend to this portfolio. The company has beaten our expectations for three straight quarters now, and will be looking for its fourth in a row before the bell on Wednesday, March 24. Dave thinks it has a pretty good chance of outperforming, given its Earnings ESP of 7.69%. The editor added WGO once again on Monday with a 12.5% allocation, while getting out of Zumiez (NASDAQ:ZUMZ) with a slight loss. Read the full write-up for more.
Healthcare Innovators: Synthetic biology is a growing field that’s being used in more applications every day. On Monday, Kevin got into this space by adding Twist Bioscience (NASDAQ:TWST), which manufactures and sells synthetic DNA-based products. Analysts are all over the place on this name, but Kevin isn’t waiting around for a lower price… because he might not get one! While the valuation is rich at 40X sales, revenue growth at TWST is over 30% and Kevin expects that rate to climb as more big pharma customers demand their synthetic DNA applications. And remember, this is not drug developer with a pipeline of risky clinical trials -- Twist is a platform of DNA libraries and tools to help biotech companies achieve their R&D objectives. Plus, TWST could be an ideal acquisition target for a biopharma giant. Make sure to read Kevin’s complete commentary about this new addition. By the way, this portfolio had three of the top five winners among all ZU names today. Those impressive performances came from Dynavax (NASDAQ:DVAX) Technologies (DVAX, +9.3%), Editas Medicine (NASDAQ:EDIT, +7.8%) and Meridian Bioscience (NASDAQ:VIVO, +5%).
Black Box Trader: The portfolio cashed in a double-digit winner while swapping out three positions in this week's adjustment. The stocks that were sold today included:
• Olin Corp. (NYSE:OLN, +13%)
• Resideo Technologies (NYSE:REZI)
• Athene Holding Ltd. (NYSE:ATH)
The new buys that filled these open positions were:
• Jabil (JBL)
• Timken Steel (TMST)
• U.S. Steel (X)
Read the Black Box Trader’s Guide to learn more about this computer-driven service.
Headline Trader: "The 10-Year Treasury yield has tapped the brakes, and we see a continued reversal of the rotation trend out of tech and into cyclicals as tech regains some of the runway it lost in recent weeks. If yields can stay at bay, tech may be on the precipice of a renewed ripping rally.
"The increasingly powerful retail investing cohort is starting to put their stimulus checks to work, buying the tech dip, which we are seeing in the market today.
"Uncertainties that we need to focus on in the near to medium-term future include: another rapid upside move in yields that would again pressure tech stocks, a new vaccine-resistant strain of COVID, issues with current vaccine distribution, and excessive inflation as the economy reopens that may force the Fed to roll off some balance sheet assets sooner than anticipated." -- Dan Laboe
Have a Good Evening,
Jim Giaquinto
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