Dow Reaches New Record While Tech Remains Under Pressure

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Despite concerns of increasing inflation and an overheated market, the Dow still managed to make some history on Wednesday as recovery names are doing better than tech these days. The NASDAQ now has a four-day losing streak.

The Dow advanced 0.29% (or about 97 points) today to 34,230.34, which marks its first record close since April 16. The S&P advanced 0.07% to 4167.59.

But the NASDAQ just can’t catch a break as the growth names have come under pressure. The index slipped another 0.37% (or around 51 points) to 13,582.42. Big Tech was mostly lower again with Facebook (FB), Amazon (AMZN) and Netflix (NFLX) each down by more than 1%. Apple (AAPL) could only muster a 0.20% advance after plunging more than 3% on Tuesday.

Interestingly, Treasury Secretary Janet Yellen walked back her comments a bit from yesterday. The former Fed chair said she was not “predicting or recommending” that interest rates might have to rise to keep the economy from overheating. Investors know deep down that she’s probably right, but they don’t want to hear it right now.  

As a prelude to Friday’s Government Employment Situation report, ADP announced that private payrolls added 742,000 in April, which was short of expectations of around 800K. However, it marked a substantial improvement over the previous month’s 565K, which was revised higher. The leisure and hospitality spaces are making up a lot of lost ground as people in those areas get back to work amid the vaccine rollout.  

In other data news on Wednesday, the ISM services index came to 62.7 last month, which was down from 63.7 in March and below expectations. However, it remains well in expansion territory over 50 and should continue to be strong as consumers return to normal after the pandemic.   

“Its earnings season and while the talking heads on TV will tell you that it is mostly over, the truth is its still on in a big way. The big names might have reported but there are still tons and tons of companies that have yet to tell us what is going on,” said Brian Bolan in Home Run Investor.

As usual, Brian is right. Some of the hundreds of reports coming on Thursday include Square (SQ), Roku (ROKU), Moderna (MRNA), Groupon (GRPN) and Penn National Gaming (PENN).

Today's Portfolio Highlights:

Home Run Investor: Now that the economy is opening up, it’s going to need more goods moving around the country. Therefore, Brian added a transportation play on Wednesday by picking up Echo Global Logistics (ECHO), a leading provider of technology-enabled transportation and supply chain management services. The company beat the Zacks Consensus Estimate in each of the last four quarters with an average surprise of 47%. Rising earnings estimates for this quarter and next made ECHO a Zacks Rank #2 (Buy). Along with all this, the valuation is looking pretty good too. Meanwhile, the editor also decided to sell the underperforming U.S. Silica Holdings (SLCA). See the complete commentary for more on all of today’s action.  

Surprise Trader: The retailers will dominate earnings season next week, so Dave got a head start on Wednesday by adding department store chain Dillard’s (DDS). The company has beaten the Zacks Consensus Estimate in each of the past three quarters and has a positive Earnings ESP of 6.49% for the next quarter, which hasn’t officially been announced yet but will most likely be sometime next week. And one more thing: DDS is part of the Retail – Regional Department Stores space, which is in the Top 1% of the Zacks Industry Rank! The editor added DDS on Wednesday with a 12.5% allocation and also sold Perficient (PRFT) for a 2.9% return in a little over a week. The complete commentary has more on these moves.

Commodity Innovators: The portfolio cashed in a couple of profits on Wednesday. Jeremy sold Alcoa (AA) for a more than 24% return in a little over a month after the aluminum giant hit his $40 targets. The editor also sold Invesco DB Commodity Index Tracking ETF (DBC) for 8.5% in two months. He would love to get back into these names on any selloffs. Read the full write-up for more specifics. By the way, this portfolio had a couple top performers today as Devon Energy (DVN) rose 7.6% and IPath Series B Bloomberg Coffee Subindex Total Return ETN (JO) increased 6.6%.

Stocks Under $10: The two best performers among all ZU names on Wednesday came from this portfolio... and they were both double-digit winners. MRC Global (MRC) jumped 14.1% and GT Biopharma (GTBP) advanced 13%. But that's not all. GTBP is easily the biggest mover over the past 30 days as well. The stock has jumped more than 59% in that time, which is double the runner up!

All the Best,
Jim Giaquinto

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