The Dow dropped by almost 1% on Monday… and yet the index still soared by 7.6% in August. That’s the kind of a month we just had!
In addition, the NASDAQ jumped by 9.6% and the S&P was up 7%. That makes five straight months of gains for all the major indices, which underscores the truly unprecedented advance off the coronavirus lows from late March.
The market has been enjoying a lot of good news lately that’s been backing up the positive sentiment. Just last week at the virtual Jackson Hole symposium, the Fed let us know that rates would remain at low levels longer than we thought and even if inflation gets back to the magic number of 2%.
Moreover, good data on a vaccine candidate from Moderna (MRNA) and a testing system from Abbot Labs (ABT) have investors feeling better about fighting and eventually conquering this pandemic. This all comes as coronavirus cases have been thankfully moderating in the past few weeks.
The NASDAQ made another new high on Monday by climbing 0.68% (or nearly 80 points) to 11,775.46.
It was the only index with a positive close today, probably because it got some help from a couple high profile stock splits. Apple (AAPL) officially completed its 4-for-1 stock split, while Tesla (TSLA) went through with a 5-for-1.
The iPhone maker was up 3.39% in the session, while the electric car pioneer surged 12.57%.
The S&P had been keeping up with the NASDAQ’s record-setting pace over the past week or so, but today it slipped 0.22% to 3500.31.
As mentioned earlier, the Dow was off 0.78% (or about 223 points) to 28,430.05. The index had turned positive for 2020 on Friday, but that didn’t last long.
Today also included the shake-up that we’ve been talking about for the past week, as Salesforce (CRM), Amgen (AMGN) and Honeywell (HON) joined the Dow by replacing ExxonMobil (XOM), Pfizer (PFE) and Raytheon (RTX), respectively.
The market keeps moving higher, which means a lot of folks keep getting more nervous that a good-sized pullback is on the way. Will that be the story of September, which is the worst month of the year for stocks historically? Or will it be six straight?
We’ll kick things off tomorrow. And don’t forget the big jobs report on Friday.
Today’s Portfolio Highlights:
Counterstrike: The algos weren’t impressed with the 40% surprise at Zendesk (ZEN) in late July. Shares sold off after the news. However, Jeremy noticed that this Zacks Rank #2 (Buy) software development company has consolidated under $90 and is breaking higher. He thinks this stock could get as high as $113, so there’s plenty of running room here. The editor added ZEN on Monday with a 13% allocation. Meanwhile, the editor sold United Natural Foods (UNFI) for a more than 10% return in about two-and-a-half months because there doesn’t seem to be much of a catalyst left. Read the full write-up for more on today’s moves.
Blockchain Innovators: Semiconductors have been a very successful space for this portfolio, so that’s where Dave went for his newest addition. The editor picked up Alpha and Omega Semiconductor (AOSL), a Zacks Rank #2 (Buy) with expected earnings growth of more than 21% for this year and over 34% for next. The stock plunged from a high of $22 in 2016 to around $6 earlier this year, but has now rebounded into the mid-teens. Dave is expecting more. By the way, the portfolio also cut the underperforming Net Element (NETE) position. See the complete commentary for more on today’s action. In other news, this portfolio had a couple of the top performers on Monday with Exp World Holdings (EXPI, +8.57%) and Advanced Micro Devices (AMD, +6.16%).
Value Investor: Peanut allergy fighter Aimmune Therapeutics (AIMT) soared 171.6% on Monday. That’s in one day! The drugmaker agreed to be bought by swiss food staple Nestle for $2.6 billion. That marks a 174% premium to AIMT’s closing price from Friday. The deal should close in the fourth quarter of 2020. Needless to say, this company was easily the best performer of the day. AIMT is now the portfolio’s biggest mover with a gain of approximately 112% in less than five months.
Black Box Trader: The portfolio swapped out four positions in this week’s adjustment. The stocks that were sold today included:
• Commercial Metals Co. (CMC)
• TRI Pointe Group (TPH)
• Big Lots (BIG)
• Amkor Technology (AMKR)
The new buys that filled these spots were:
• DICK’S Sporting Goods (DKS)
• HanesBrands (HBI)
• Lumber Liquidators (LL)
• Maxar Technologies (MAXR)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
On to September!
Jim Giaquinto
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