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Coming off of the best quarter in more than two decades, the major indices started the second half of this difficult year with mostly positive results and a new closing high.
You can probably guess that the milestone came from the NASDAQ, which rose 0.95% (or nearly 96 points) to a new record close of 10,154.63. Also, the S&P rose 0.50% to 3115.86.
The Dow soared nearly 800 points in the first two sessions of this week with a lot of help from Boeing (BA). However, the index took a break on Wednesday and slipped 0.30% (or nearly 78 points) to 25,734.97.
Just yesterday, stocks completed the best quarter in more than 20 years with the NASDAQ soaring 30.6%, the S&P up 20% and the Dow rising 17.8%.
We enjoyed a lot of good news on Wednesday, but perhaps none bigger than positive trial results for a potential coronavirus vaccine from Pfizer (PFE, +3.2%) and partner BioNTech.
The market always loves to hear about progress on the vaccine front. We’ve seen it soar on such news several times before… only for the air to come out of the balloon in subsequent days. So we’ll see where this story goes moving forward.
But if it is something worth getting excited about, the best part is that Pfizer would be able to manufacture A LOT of it.
Meanwhile, the ISM manufacturing index soared to 52.6% last month, which puts it above 50 (signifying expansion) for the first time since February. That was well ahead of expectations below 50.
Also, ADP said private payrolls increased by 2.37 million in June. It’s an appetizer for tomorrow’s Government Employment Situation report, which comes a day early due to the market being closed on Friday for July 4th.
Last month’s report was one of the most surprising in a long time, as the economy added 2.5 million jobs with the unemployment rate moving lower to 13.3%.
The vaccine news and the economic data are welcomed developments for a market that’s growing increasingly concerned about rising coronavirus cases and stalled reopening plans. Let’s hope we get more positive headlines tomorrow as we head into the long weekend.
Today’s Portfolio Highlights:
Value Investor: The portfolio is getting ready for the upcoming earnings season with a couple of new buys on Wednesday. Penske (PAG) is an auto, truck and logistics company that announced improvement across every segment in a business update about a month ago. Tracey likes PAG because it offers exposure to a couple of hot areas: car sales and logistics. Shares are up 40% in three months but still down nearly 23% for the year.
The other buy is Donnelley Financial Solutions (DFIN), a Zacks Rank #1 (Strong Buy) global risk and compliance solutions company. The editor likes this name because of its software transformation strategy, which plans to expand its software solutions business by 10% each year until 2024. The segment saw record sales of $47.3 million in the first quarter. Shares are up more than 59% in the past three months, but still down nearly 20% so far this year. But Tracy wants you to be prepared for volatility with this small-cap. Read the complete commentary for more these new buys, including a closer look at their value characteristics.
Commodity Innovators: Copper prices are on the rise, so Jeremy took advantage by adding Freeport-McMoRan (FCX) on Wednesday. This Zacks Rank #2 (Buy) also mines gold and silver, which are on their own bullish runs. The editor sees FCX as a long-term holding and expects it to eventually get back to 2020 highs at $13 and maybe even 2019’s high of $15. The portfolio also sold VelocityShares 3X Long Gold ETN (UGLD) before it gets delisted, bringing a gain of 4.26%. Read the complete commentary for a lot more on today’s moves.
Home Run Investor: With a solid report from Micron, the semiconductor industry looks positive as we head into earnings season. Therefore, the portfolio added CyberOptics (CYBE) on Wednesday. This Zacks Rank #2 (Buy) is a leading provider of sensors and inspection systems, which are used on production lines that manufacture surface mount technology circuit boards and semiconductor process equipment. CYBE has beaten the Zacks Consensus Estimate for 11 straight quarters and is expected to generate earnings growth of 200% for the current year and another 36% next. See the full write-up for a lot more on this new addition.
Healthcare Innovators: Cell therapy is a ground-breaking treatment that uses a patient’s own cells to repair damaged tissues. On Wednesday, Kevin got involved in this innovative field with the addition of Vericel (VCEL). The company has products that help to fix cartilage defects in the knee and severe burns… and it recently submitted a new candidate to the FDA. The company pulled its 2020 guidance due to the coronavirus cancelling elective surgeries, but sales are expected to soar 44% to nearly $180 million next year. Analysts were pretty excited about VCEL before the pandemic, and the editor thinks it will be hot once again moving forward. In fact, he expects the stock to breakout above $15 this quarter. Read the full write-up for more on this new addition. By the way, this portfolio had a solid session with a couple of the best performers of the day among all ZU services, including Global Blood Therapeutics (GBT, +11.6%) and CRISPR (CRSP, +6.8%).
Stocks Under $10: It was a bit of a risk for Brian to add Bed Bath & Beyond (BBBY) on June 15. This specialty retailer of domestic merchandise and home furnishings has been under pressure for years now as consumers turn toward online shopping and away from brick-and-mortar. However, the editor thought he could get something out of this name… and he did! But it was never supposed to be a long-term holding. So with coronavirus cases on the rise, he thought this would be a good time to sell BBBY and take a nice 29.6% return in a little over two weeks.
Have a Good Evening,
Jim Giaquinto
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