Not only did yesterday’s post-Fed rally continue on Thursday, but it also picked up steam and left the major indices with a chance for their first positive weekly performance since the beginning of September.
The Dow surged by 1.48% (or about 506 points) to 34,764.82, while the S&P jumped 1.21% to 4448.98. The NASDAQ improved 1.04% (or around 155 points) to 15,052.24. All of these indices are now up more than 2% in the past 2 days.
We’re enjoying the first real rally for stocks during this difficult month of September. In fact, it’s the first time the major indices all advanced by more than 1% since July 20. And now stocks are in striking distance of snapping a two-week slump with a solid performance on Friday. (The Dow has actually been in the red for three straight weeks.)
Big moves after a Fed statement are normal… and sometimes this action goes in the oppositive direction as the day before. However, investors are obviously still feeling pretty good about what they heard yesterday.
Basically, the stimulus policies that helped us survive the pandemic will stay put for now. However, we’re growing closer to scaling back the asset purchase program now that the Fed’s inflation and employment mandates are nearly met. We’ll most likely get an announcement in the next Fed meeting before the end of the year.
“Despite the more hawkish tone from Fed Chair Powell yesterday afternoon, it seemed to be what the markets wanted to hear,” said Dan Laboe in Headline Trader. “As I have said in previous commentaries, a tapering timetable from the Fed now comes as a relief due to its implications on our economic health.”
In a nutshell, the economic recovery is still moving forward despite the delta variant, and the progress is so substantial that it’s time to start thinking about throwing the crutches away.
The Evergrande situation continues to be a potential problem, as China’s largest property developer remains precariously close to defaulting after taking on a debt load of approximately $300 billion. The company resolved a $36 million interest payment yesterday, which allowed for some breathing room on Thursday.
But Evergrande is still in trouble as investors wonder if the Chinese government will let it fail or not. We’ll be watching this story with great interest in the days ahead. We’ll also be keeping a close eye on Washington here at home as it attempts to stop a government shutdown by raising the debt ceiling.
The jobless claims report on Thursday was a bit of a disappointment, but fortunately it didn’t get much attention considering all the other news. The print came to 351,000 claims last week, which was more than expectations of 320K and the previous week’s 335K.
It would be quite a feat for stocks to finish this week in the green after such a rough start on Monday. Let’s see what happens tomorrow...
Today's Portfolio Highlights:
Technology Innovators: The market is heating up after a cold start to September, so Brian decided to turn up the temperature in this portfolio by adding Thermon Group Holding (THR). This Zacks Rank #2 (Buy) is engaged in thermal solutions, known as heat tracing, for process industries such as energy, chemical processing and power generation. The editor thinks that this company, which has maintained profitability throughout the last year, is poised to turn around and head back to recent highs. THR saw topline growth of 25% in the most recent quarter while margins have advanced to 5.9% from 3.7%, which could potentially boost EPS moving forward. Read the full write-up for more on this new buy and get ready for two additions next week as Brian works to get the portfolio fully invested with 15 names.
Home Run Investor: If you want to get more aggressive in your portfolio (as Brian wants to do with the market on the rise), then the chip space is a good place to make that happen. The editor bought again on Thursday by picking up Camtek (CAMT), which makes automatic optical inspection systems for several industries, including semiconductor manufacturing & packaging. The company has beaten the Zacks Consensus Estimate three times and matched once over the past four quarters, while rising earnings estimates gave CAMT a Zacks Rank #2 (Buy) status. Meanwhile, Brian also sold defensive pick BellRing Brands (BRBR) for a slight loss. See the complete commentary for more on all of today’s action.
Stocks Under $10: The staffing business is booming right now, which is why Brian added RCM Technologies (RCMT) over a week ago. The stock is still in the red since being picked up on September 14, but things may be about to change. The stock was the best performer among all ZU names on Thursday with a surge of nearly 14%. Remember, the service’s biggest winner is staffing firm Cross Country Health (CCRN), which has soared 157% in ten months.
See You Friday,
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