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Major Indices Surge Double Digits in First Half of 2021

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The market may be pretty slow right now, but totals for the first half and second quarter show that stocks have actually been on a tear for most of 2021. Furthermore, those periods ended on Wednesday with the S&P once again setting a new record.

For the first half of the year, each of the major indices are up double digits. The S&P soared 14.4%, while the Dow advanced 12.7% and the NASDAQ rose12.5%. A good amount of the half saw technology taking a backseat to recovery names, but that has been changing in recent weeks.

As a result, the NASDAQ outperformed in the second quarter with a rise of 9.5%, while the S&P was up 8.2%. The Dow only managed a 4.6% advance as those re-opening names fell out of favor.

The recovery has certainly been vibrant, but you wouldn't know it by the past few weeks. This summer swoon has put the market in a lethargic mood. Investors are finally able to get out now that that pandemic is losing its grip. The two potential market movers on the horizon are the jobs report on Friday and the next earnings season in a couple weeks.

Speaking of jobs, the ADP employment report today stated that private payrolls added 692,000 in June, which easily beat expectations of 600K. However, it was less than the previous month’s 886K, which was actually downgraded from the original print of 978K.

Meanwhile, pending home sales jumped 8% month over month in May, which marked a dramatic turnaround from a 4.4% plunge in April and provided a nice follow-up to yesterday’s strong data on consumer confidence and home prices.

But it didn’t provide much inspiration for the S&P on Wednesday, which advanced only 0.13% to 4297.50. The index has gained less than 10 points this week, though it just completed its fifth straight session with a record high. Now that's slow! The NASDAQ slipped 0.17% (or about 24 points) to 14,503.95, which ends back-to-back record highs and is only the second day in the past seven without reaching a milestone.

The Dow managed a respectable gain of 0.61% (or about 210 points) to 34,502.51, but the index was actually down slightly for the month of June as recovery names were pushed aside by tech. That’s why the NASDAQ was up 5.5% last month and the S&P advanced 2.2%.

The recovery has been extremely impressive so far and it’s not done yet! Now we start a new month… a new quarter… and a new half!

Today's Portfolio Highlights:

Home Run Investor: The thing about breakouts is that you have to be in the stock before it makes the move. That’s why Brian added Sterling Construction (STRL) on Wednesday. This Zacks Rank #2 (Buy) is at the low end of the range with potential for a substantial move higher. Furthermore, STRL topped the Zacks Consensus Estimate in three of the past four quarters and has a “great” valuation with margins moving higher in the past couple of quarters. The editor cleared plenty of room for this name by selling three positions. The big winner was LeMaitre Vascular (LMAT), which returned 27.1% in less than four months. He also sold Virtu Financial (VIRT) and Ooma (OOMA) for losses. STRL fills one of those spots, but there’s room for more so there might be another addition tomorrow. Read the full write-up for more on today’s action.

Large-Cap Trader: The turn of the month means it’s time for some changes to this portfolio. On the last day of June, John added the following three companies:

• Micron (MU) – a leading semiconductor memory company
• Jabil (JBL) – provider of electronic manufacturing services and solutions
• Williams Sonoma (WSM) – a major home furnishings retailer

All of these picks have impressive histories of topping the Zacks Consensus Estimate with double-digit beats over the past four quarters. They’re also from highly-ranked industries and are showing growth at a reasonable price (GARP). The editor is using set-aside cash this time around, so there are no sells. The portfolio weights come to about 5% each. Read the full write-up for a lot more on all of these new additions.

Healthcare Innovators: This portfolio again had the best-performing stock of the day as Editas Medicine (EDIT) jumped 22.86%, which doubled the next biggest gainer. Gene-editing names have been doing very well since Intellia Therapeutics (NTLA) and its partner announced some solid Phase 1 data recently. EDIT is also among the biggest winners over the past 30 days with a surge of 66.8%. By the way, you may remember that Kevin sold NTLA earlier this week for a more than 90% return in less than five months!

All the Best,
Jim Giaquinto

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