The Dow’s winning streak came to an end on Thursday, as all of the major indices pulled back in a busy day of earnings reports and economic data.
The index jumped more than 1100 points in the previous four days with help from positive vaccine news and the start of earnings season. But today the Dow slipped back by 0.50% (or about 135 points) to 26,734.71.
The S&P had the best performance by only declining 0.34% to 3215.57, while the NASDAQ again had the worst with a slump of 0.73% (or about 76 points) to 10,473.83.
We received conflicting pieces of data on Thursday. On the one hand, jobless claims of 1.3 million fell just short of expectations, suggesting that the jobs picture is only slowly improving with the number remaining well over 1 million.
But on the other hand, retail sales blew past expectations by rising 7.5% in June, which comes after the previous month’s double-digit surge. So consumers can’t wait to spend money… as long as they have jobs of course.
The big earnings reports today included Bank of America (BAC, -2.72%) and Morgan Stanley (MS, +2.51%). Both of these banks beat expectations, but BAC will be putting away another $4 billion for loan losses stemming from the coronavirus.
Perhaps the biggest problem on Thursday was the lack of positive vaccine news, which the market loves more than solid earnings and data at the moment.
Strong Phase 1 results from Moderna (MRNA) was a major reason why stocks moved higher yesterday.
Another big story right now is the sudden sluggishness of tech. The FAANGs didn’t do much on Thursday, except for Apple (AAPL) dropping by more than 1%.
Unfortunately, the situation might not get much better for tech tomorrow. After the bell, streaming pioneer and “stay-at-home” giant Netflix (NFLX) fell short of earnings expectations and offered a disappointing outlook for third-quarter subscriber growth.
Shares of NFLX are down approximately 10% after hours, as of this writing.
The Dow and S&P head into Friday’s session higher for the week, but the NASDAQ is lower over the past four days (thanks to that more than 2% slide on Monday).
Today’s Portfolio Highlights:
Surprise Trader: Even though there’s still no movement from Congress on an infrastructure stimulus bill, Dave wants some exposure to this industry. Therefore, he bought Summit Materials (SUM) on Thursday. This construction material company supplies aggregates, cement, ready-mix concrete and asphalt. It has a positive Earnings ESP of 18.68% for the quarter coming after the bell on Tuesday, July 21. The editor added SUM with a 12.5% allocation, while also selling half of SYNNEX (SNX) for an 18% return in just under a month. Read the complete commentary for more on today’s moves.
Counterstrike: “The tech weakness seemed to start when after Twitter (TWTR) was hacked. A bunch of big accounts were compromised and tweeted out bitcoin scam tweets. This action shines a spotlight on how tech can be vulnerable sometimes. While that event caused little selling, it didn’t last long. Twitter actually went unchanged on the day and stocks like Tesla (TSLA) and Amazon (AMZN) rallied off their lows, with the later bouncing over $100 points.
“Netflix came in after the bell with a big miss on the bottom line. It was trading down over 10% after hours and will undoubtedly add to the tech weakness we have seen this week.
“The Netflix miss tonight should set the tone for tomorrow. I would expect some selling in big tech as investors get nervous this quarter might not be cracked up to what it was made out to be. It would be healthy to get a sell off and give us some nice chances to buy at lower prices.” — Jeremy Mullin
All the Best,
Jim Giaquinto
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