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Dow Breaks Through 27,000 to a New Record High

Jim Giaquinto

While the S&P has failed to close over 3,000 the past two sessions, the Dow had no problem crossing over 27,000 for the first time on Thursday and closing above that mark.

Regardless, both indices ended the day at record highs after a second day of dovish comments from Fed Chair Jerome Powell.

The Dow was up 0.85% (or about 227 points) to a new record of 27,088.08. In addition to expectations for a rate cut, the index also got a lot of help from the White House deciding to drop its proposal to eliminate drug rebates.

The S&P peeked over 3,000 again on Thursday, but finished less than a point away at the closing bell. It still made a new high by climbing 0.23% to 2999.91.

The NASDAQ went from being the only index in record territory on Wednesday to the only index in negative territory on Thursday. But it was only down 0.08% (or about 6 points) to 8196.04.

Each of the major indices are higher for the week heading into Friday’s session. Another positive performance tomorrow would mark two green weeks to start July.

Mr. Powell didn’t suddenly change his mind on Thursday when testifying in front of the Senate Banking Committee. He basically reiterated yesterday’s dovish tone about the economy doing pretty well, but suffering from uncertainties that could limit its potential.

All the market heard was that a rate cut seems very likely later this month.  

With the Fed in the background for the next few weeks, the market’s attention will now shift to earnings season. We'll be watching to see how much those "crosscurrents" that the Fed Chair mentioned are impacting corporate results. The big banks kick things off next week.

Today's Portfolio Highlights:

Surprise Trader: Next Thursday’s report from shoe company Sketchers (SKX) could be a good bellwether for the entire apparel & shoe industry this earnings season. The company will be going for its fourth beat in a row and has a positive Earnings ESP of more than 6%. Analysts are expecting year-over-year earnings growth of more than 13%. Dave sees another positive surprise next week, so he added SKX on Thursday with a 12.5% allocation. Read the full write-up for more.

Income Investor: There are new ways to order coffee these days at Starbucks (SBUX). Now you can order it on your phone and pick it up without a wait… or even have it delivered. These are just some ways the coffee giant keeps bringing customers into their stores. It also plans more expansion into Europe and Asia. Maddy considers SBUX to be a solid long-term pick, especially with its dividend yield of 1.6% and status as a Zacks Rank #2 (Buy). Shares are up about 40% this year with earnings growth expected at almost 18% in the report coming at the end of the month. Read the complete commentary for more on this new addition.

Blockchain Innovators: As part of its goal to serve the unbanked populations of developing economies, Net 1 UEPS Technologies (UEPS) has been working on bespoke blockchain-based solutions. (By the way, UEPS stands for universal electronic payment system.) The stock has come off its 52-week low and earnings estimates have stabilized, which are a couple points that really caught Dave’s attention. Plus, next year’s EPS growth estimate is currently at 90.5%. The editor believes UEPS will be a good addition to the portfolio. Read the complete commentary for more.

Technology Innovators: The market is making new highs and Brian wants new exposure in the portfolio. On Thursday, he added Kratos Defense Solutions (KTOS), a Zacks Rank #1 (Strong Buy) specialized National Security Technology business that provides mission critical products, services and solutions for U.S. National Security priorities. The company has beaten the Zacks Consensus Estimate by 154% on average over the past four quarters and will report again on the first day of August. Read the complete commentary for a lot more on this new addition.

Good Evening,
Jim Giaquinto

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