A business deal for a yet-to-be-approved coronavirus vaccine was enough to give the major indices another positive session on Wednesday.
The U.S. and Pfizer/BioNTech agreed to a nearly $2 billion deal whereby the partnership would provide 100 million doses once it’s been cleared with the possibility of 500 million more afterward.
This is putting the cart before the horse since we don’t have a vaccine yet. But we should start thinking about distribution now, and PFE is a big enough company to make it happen on a global scale. Shares were up more than 5% today.
As we’ve said many times before, the market loves any positive news on a vaccine… and this announcement sufficed today.
The Dow advanced 0.62% (or about 165 points) to 27,005.84 for its third day of green, while the S&P rose 0.57% to 3276.02 for its fourth day in the plus column. Stocks moved higher into the close.
Tech is still underperforming its counterparts, but the NASDAQ managed to advance 0.24% (or about 25 points) to 10,706.13.
But it wasn’t all rainbows on Wednesday. Stocks had to overcome increasing tensions with China after the U.S. closed that country’s consulate in Houston on concerns over spying. Of course, China promised retaliation.
Meanwhile, Congress is really starting to talk about more stimulus since federal benefits will soon expire while coronavirus cases continue to spike. The market thinks they will eventually figure something out, but it will likely be a nerve-wracking process that could hurt stocks on any negative developments.
The big earnings news came after the bell when Microsoft (MSFT) beat on both the top and bottom lines. However, shares are down about 2% afterhours as of this writing.
It will be interesting to see how this report impacts the sluggish tech sector tomorrow.
Tesla (TSLA) also beat expectations after the close, but shares of the electric car company were up more than 4% afterhours.
Today’s Portfolio Highlights:
Home Run Investor: If you’re in the mood for a ‘sactional’, then you have to go to The Lovesac Company (LOVE). A sactional is a large upholstered seating that’s washable, changeable and reconfigurable. LOVE is a specialty furniture store that specializes in such unique products. The furniture itself may not be for everyone, but Brian sure does like the stock. This Zacks Rank #2 (Buy) has beaten earnings estimates in three of the past four quarters with a 15.5% average surprise. Also, it beat on the topline as Internet sales growth of 258% more than offset a 30% plunge in showroom sales. LOVE also looks to be a great short squeeze candidate with 24% of the float sold short. Read the full write-up for a lot more on this new pick.
Surprise Trader: This pandemic is a tough time to quit tobacco, which may explain why the space is in the top 16% of the Zacks Industry Rank. Turning Point Brands (TPB) is a Zacks Rank #1 (Strong Buy) tobacco products company that beat by more than 34% last time and now has a positive Earnings ESP of 20% for the quarter coming before the bell on Tuesday, July 28. TPB still has a lot of ground to recover before getting back to 2019 highs over $50, so Dave got involved on Wednesday with a 12.5% allocation. The editor also sold Summit Materials (SUM) today. Read the full write-up for more on today’s moves.
ETF Investor: Hundreds of biotechs are working on coronavirus vaccines and treatments right now. However, they won’t all succeed. In fact, the vast majority of them will fall short. Instead of trying to pick and choose the winners, broader biotech ETFs allow investors to capitalize on the increased interest and rising spending in the industry as a whole. Therefore, Neena picked up SPDR SP Biotech ETF (XBI) on Wednesday. This fund is equal-weighted and therefore tilted toward many mid-cap and small-cap biotechs. Its among the cheapest funds and compliments the portfolio’s existing iShares NASDAQ Biotechnology ETF (IBB) position. The editor also sold Vanguard Real Estate ETF (VNQ) today. Read the full write-up for more.
All the Best,
Jim Giaquinto
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