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Friday, July 30, 2021

Dow’s Four-Day Run Ends as Stocks Dip Again

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The NASDAQ dropped by more than 1% for a second straight session on Thursday, as money continued to flow out of tech despite better-than-expected jobless numbers and the promise of near zero rates for years to come.

Sometimes the market needs a day to digest Fed news, even if they take rate hikes off the table until 2023 at least. Stocks dipped on Wednesday despite the news, but there was a chance they could bounce back in the following session.

But they didn’t.

Instead, the NASDAQ dipped another 1.27% (or around 140 points) to 10,910.28. That marks a two-day decline of approximately 2.5% as all of the FAANGs were down by more than 1% for a second consecutive day.

The S&P was off 0.84% to 3357.01, while the Dow snapped its four-day winning run with a decline of 0.47% (or about 130 points) to 27,901.98.

The market had been dealing remarkably well with the lack of more coronavirus relief, but Chair Jerome Powell’s comments yesterday seemed to remind investors just how much of a void this lack of compromise has left.

He let it be known that the economy’s best chance to stay vibrant during this pandemic was for action from both the Fed and Congress… though only one has come through so far.

Meanwhile, jobless claims last week came in at a very high 860,000, but it was better than expectations and the previous week. More importantly, it marked the third straight week under 1 million, which has become a rather important statistic during this pandemic.

So the week started off with two days of solid gains and then was followed by a couple sessions of losses. Now the indices head into Friday with modest gains for these four days as they attempt to break two straight weeks of losses.

Let’s see what happens.

Today’s Portfolio Highlights:

Insider Trader: Shares of Public Storage (NYSE:PSA) have recovered from the coronavirus selloff and are now up 4% year-to-date. This self-storage facility operator also has a dividend that currently yields 3.6%. However, Tracey was most impressed that two directors — who rarely ever buy — suddenly picked up shares in the past couple of weeks. And they’re making these moves while momentum is on the rise for PSA with shares up more than 10% in the past month. Why are they buying now? It could be an indication that these insiders feel pretty good about their company thriving amid and after this pandemic. The editor added PSA on Thursday with an 8% allocation, which is the remaining cash in the portfolio. Read the full write-up for a lot more on this new addition.

Income Investor: With volatility on the rise, Maddy wanted to add a low-risk ETF that provides consistent income. And you can’t get more consistent than a stock that raises its quarterly dividend for 20 consecutive years or more. On Thursday, the editor added SPDR S&P Dividend ETF (NYSE:SDY), which specializes in these types of names by tracking the S&P High Yield Dividend Aristocrats Index. The fund has bounced more than 30% since the coronavirus low, but is still down 10.7% year to date. The editor sees a lot of ground left to recover and appreciates its annual growth rate of 8.1% over the past five years. Read the complete commentary for a lot more on this new addition.

Technology Innovators: This new work-from-home environment means that people need more than just a computer and an Internet connection. They need all the peripherals too, and that’s where Logitech (NASDAQ:LOGI) comes in. This Zacks Rank #1 (Strong Buy) develops and markets innovative products in PC navigation, Internet connections, digital music, home-entertainment control, video security, interactive gaming and wireless devices. As remote working has grown in importance, so too has LOGI’s quarterly earnings surprises. Most recently, it topped by 77%! Brian also thinks its improving margins and rising sales numbers will mean even bigger EPS numbers moving forward. The editor added LOGI on Thursday, while also selling United States Cellular (NYSE:USM, +3.9%), MaxLinear (MXL) and FormFactor (FORM). Read the full write-up for a lot more on all of today’s moves.

Blockchain Innovators: IT consulting firm Virtusa (NASDAQ:VRTU) was recently bought out for about $2 billion, sending shares higher by 67.4% since inception less than four months ago. Dave decided to take this ‘victory lap’ — and that profit — by exiting the stock on Thursday. The new buy is Iteris (NASDAQ:ITI), a Zacks Rank #2 (Buy) aggregator of traffic data. Municipalities have been hiring the company to help them optimize the flow of traffic and enhance safety. However, Dave thinks that ITI has bigger plans for its blockchain technology moving forward and will build on this subscription revenue model. The autonomous driving industry could be a possibility, since it already utilizes blockchain. Read the full write up for more on today’s moves.

All the Best,
Jim Giaquinto

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