Late Rally Stretches Dow Winning Streak to 5 Days

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The Dow’s winning streak seemed to be on its last leg Tuesday, but an eleventh-hour rally lifted the index well into positive territory by the close.

It finished with an advance of 0.28% (or nearly 74 points) to 26,909.43, which was the high of the day after being lower by approximately 100 points earlier. 

The Dow has closed in the green for five straight sessions and is now within 2% of its all-time high set intraday back on July 8.

The S&P also made it to positive ground by the close, but it could only manage an advance of 0.03% to 2979.39. It’s about 1.6% away from a new high.

The NASDAQ almost made it back to the plus side as well, but came up just short as tech continues to be under pressure. However, the index was only down 0.04% (or a little more than 3 points) to 8084.16.  

Apple bucked the softness in tech on Tuesday with one of those flashy investor events, which included new versions of the iPhone and Apple Watch. But perhaps the biggest news was that the upcoming Apple TV+ streaming service will have a price of only $4.99 a month, which is half the expectations of around $10 and well below the price points of its competitors. AAPL was up 1.2% today while most of the other FAANGs were in the red. 

Stocks are interested to see what the ECB does on Thursday, but it’s real focus is on next week’s Fed meeting when another rate cut is widely anticipated.

In the meantime, the market doesn’t have a reason to venture too far in this environment. Of course, that could change quickly if President Trump is feeling ‘tweetish’.  

Fortunately, stocks have been in a better mood since last week when the U.S. and China agreed to new meetings in Washington early next month.

Recently, China has agreed to buy more U.S. agricultural products in hopes of getting better terms in a trade deal. This is far from any type of breakthrough, but you’ve got to re-start negotiations somewhere!

Today's Portfolio Highlights:

Stocks Under $10: There’s been a “dramatic” sector rotation into the retailers of late, so that’s where Brian is going for his next addition to the portfolio. He picked up Sportsman’s Warehouse (SPWH), a Zacks Rank #2 (Buy) outdoor sporting goods retailer. The stock has moved up from its lows and has a Zacks Style Score of “A” for both Value and Growth. SPWH reported a positive earnings surprise of 8% in its most recent quarter, but the editor is most attracted to its low valuation. The stock looks like it will continue its bounce from the bottom. Read the complete commentary for more on today’s addition, as well as updates on all the other 14 positions in this full portfolio.

Zacks Short List: The portfolio swapped two positions in this week's adjustment. It short-covered salesforce.com (CRM, +1.7%) and World Wrestling Entertainment (WWE), then replaced these names by adding Palo Alto Networks (PANW) and Qualcomm (QCOM). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Surprise Trader: “Choppy action on Wall Street as the major market averages came under pressure early. A lunch time rally took stocks to new highs only to let loose an hour later. Then, a late day surge took things into positive territory.

“The Chinese announced an increase in their buying of agricultural goods in a good faith effort to get things rolling when the two sides meet over the trade war later this month.

“Next week’s FOMC meeting still remains as the single largest risk event of the month. Ahead of that, a handful of earnings reports are coming but nothing all that earthshattering should appear. There will be an ECB decision, likely dwarfed by our Fed next week.” – Dave Bartosiak

All the Best,
Jim Giaquinto 

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