Stocks Enjoy Second Straight Week of Gains

The market just completed a second straight week in the green, but more importantly it also held onto all of the gains made in last week’s epic rally.

Stocks slipped late in the session and ended slightly on negative ground by the close. However, the NASDAQ still advanced 0.7% over the past five days, while the S&P and Dow each gained about a half-percent.

The tech-heavy index had to deal with chipmaker Broadcom cutting its guidance for 2019, which took the air out of chipmakers and ultimately the whole market.  

The company blamed a good part of its troubles on the trade conflict with China. The stock plunged more than 5.5% on the day.

Investors are concerned that Broadcom’s problems are a signal that the ongoing trade impasse will be taking an increasingly bigger bite out of the market’s growth potential, especially with the chipmakers.

The NASDAQ had the worst performance on Friday by slipping 0.52% (or 40 points) to 7796.66, but it had the best run for the week.

The S&P continues to loiter right under 2900 after a decline of 0.16% to 2886.98. The Dow was in positive territory until the last few minutes. It eventually dipped 0.07% (or around 17 points) but stayed above 26,000 at 26,089.61.  

A sluggish end to a sluggish week as we move through low summer volume in front of a Fed meeting and the G-20. But there’s nothing wrong with a little sluggishness right after the best rally of the year (so far).

Recall that the Dow jumped 4.7% last week, while the S&P was up 4.4% and the NASDAQ gained 3.9%. The market managed to hold onto ALL of those gains and even add a little bit to them!

Next week will be all about the Fed meeting on the 18th and 19th. The Committee has been the market’s friend in 2019 and investors are expecting that to continue. A rate cut isn’t predicted for Wednesday, but we will be watching the language of the Fed Chairman very closely.

If the market likes what he has to say, then we could be talking about a third straight week of gains next Friday.

Today's Portfolio Highlights:

Technology Innovators: It’s never a good thing when a company guides below the consensus as Altair Engineering (ALTR) recently did, but Brian was impressed that the stock kept its status as a Zacks Rank #1 (Strong Buy). Apparently, analysts see a lot of long-term potential for this simulation technology company. The editor agrees. In addition to the durability of its earnings estimates, Brian also appreciates its solid earnings history with beats in three of the past four quarters. The most recent surprise was nearly 24%. Read the complete commentary for more on the new addition of ALTR.

ETF Investor: Two of the more compelling investment themes right now is the rollout of 5G technology and real estate in this lower-rate environment. Neena found a fund that incorporates both of these hot spaces. The Pacer Benchmark Data & Infrastructure Real Estate ETF (SRVR) is a unique name that holds real estate firms related to data and infrastructure. The index provider states that SRVR is “the sophisticated backbone of data centers, wireless towers and fiber optic networks that moves the economy’s critical data and analytics”. The fund also has a nice dividend yield of 2.12%. The editor suggests a limit order for this trade. Learn more about this new addition in the full write-up.

Value Investor: "I listened to the Broadcom conference call this week and in the semiconductor industry, the trade war and the Huawei restrictions are both having a brutal impact on business. That slowdown, in revenue and earnings, is real.

"Additionally, we know that many of the retailers are struggling too. It will get worse if the next traunch of $300 billion in tariffs goes on.

"No one is saying a recession is imminent, but the economy has clearly slowed. There is a risk, however, that the Fed will appear to be panicking, so to speak, if they start cutting as soon as July.

"But the Fed is also usually behind the curve so they may be a bit more pro-active this time.

"We'll know more after the press conference on June 19." -- Tracey Ryniec

Have a Great Weekend!
Jim Giaquinto

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