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Dow, NASDAQ Join S&P at New Highs

Jim Giaquinto

It’s too bad we only had half a session!

The major indices go into the Fourth of July holiday at new record highs.

All of them!

The S&P is now less than 5 points away from 3000 after today’s advance of 0.77% to 2995.82. That makes three straight days of new highs.

But the index is no longer alone at the top of the mountain, as its counterparts finally caught up on this abbreviated Wednesday.

The NASDAQ’s sixth straight day in the green lifted it by 0.75% (or about 61 points) to a new record of 8170.23, while the Dow also made history with a jump of 0.67% (or about 179 points) to 26,966.

Stocks have been rising all week following the trade truce between the U.S. and China at the G20 this past weekend.

However, today’s record-setting pace was mostly set by a soft ADP jobs number, which added only 102,000 jobs instead of expectations at 135,000.

We’ve seen this before. It’s the old ‘bad news is good news’ play. If the economy is showing signs of slowing down, then it makes a rate cut later this month more palatable for the Fed.

Investors have been nervous about a rate cut since the Fed Chair’s post-meeting statement about a week ago. The market has been counting on – even demanding – a cut in late July, but Mr. Powell suggested that such a move was no guarantee.

It could be more likely now.

And that makes the Government Employment Situation report on Friday all the more important. You’ll recall it was very weak last month. A soft reading once again would give the Fed another nudge.

But let’s not get too excited about a slowing economy.  

Instead, let’s get excited about freedom, BBQ and new record highs for stocks! 

Today's Portfolio Highlights:

Value Investor: Tech folks may consider a large-cap software maker like Oracle (ORCL) to be ‘boring’, but investors like Tracey consider it a defensive and reliable name in an unpredictable space. The company reported a strong fourth quarter thanks in large part to its licensing division, which enjoys a lot of recurring revenue. And since this is a well-established name, it has a good management team and solid cash flows. But the editor is most impressed with a forward P/E of 14.95 that makes ORCL cheaper than the S&P and most the of the tech space. It also pays a dividend that yields 1.6%. Even though its at new all-time highs, the editor decided to buy this Zacks Rank #2 (Buy) on Wednesday. Read the full write-up for a lot more on this new addition.

Options Trader: The chart for Science Applications International Corp. (SAIC) has a bullish pennant formation, which Kevin sees as a signal of an imminent breakout. This Zacks Rank #2 (Buy) is engaged in transaction, technical engineering and enterprise IT services for both the government and commercial customers. Sales are projected to grow 41% and earnings estimates are on the rise across the board, yet SAIC still has an attractive valuation. The editor sees a price target of 97.20 moving forward, so he bought to open 4 August 90.00 Calls on Wednesday. Read the complete commentary for more specifics.

Home Run Investor: The portfolio is finally full with today’s addition of Berry Petroleum (BRY), a Zacks Rank #2 (Buy) energy company. Brian felt the portfolio needed some exposure to the oil patch, so this is a diversification play that will move along with prices. Earnings estimates are heading mostly higher and the valuation is appealing. The editor believes this stock will keep advancing as production increases and oil prices rise. Read the full write-up for more.

Have a Safe and Happy Independence Day!
Jim Giaquinto

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