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Dow, S&P Rebound as Consumers Calm Market

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The U.S. consumer isn’t very worried about the economy right now, which helped to calm the market’s recent recession frenzy in Thursday’s session.

On the day after its worst performance of the year, the Dow advanced 0.39% (or nearly 100 points) to 25,579.39. It only recovered an eighth of yesterday’s epic selloff, but you’ve got to start somewhere! At least we didn’t add onto the losses.

The S&P also managed a green close by rising 0.25% to 2847.60, but the NASDAQ lost another 0.09% (or a little more than 7 points) to 7766.62.

The indices were all down approximately 3% on Wednesday after the yield curve inverted with the 10-year briefly falling below the 2-year.

Needless to say, the market lost its cool on fears that a recession is right around the corner.

Fortunately, the worry subsided a bit on Thursday with help from a 0.7% jump in retail sales for July and a strong quarterly report from the country’s leading retailer Walmart.

Since the consumer makes up two-thirds of the economy, this data suggests that a recession may not be as close as the bond market seems to be saying.

As mentioned yesterday, some folks feel that negative yields around the world are the main reason for the recent inversion.

There’s no way to sugarcoat it: the indices are on their way to a third straight week of losses. It would take a herculean session on Friday to get them into the green.

However, we don’t need a history-making performance to go into the weekend feeling better about things. Last week saw the market significantly trim the losses from the August 5th selloff, which was the worst day of the year for the Dow until yesterday.

So the market might be able to save face again with a strong session tomorrow… but the headlines would have to cooperate.

Today's Portfolio Highlights:

Insider Trader: It only took a 2.8% slip in Mastercard (MA) shares to convince a couple of its directors to buy. This financial powerhouse is trading close to its multi-year high, so these purchases really caught Tracey's attention since its rare to see insider buying for stocks on a roll. Meanwhile, the editor also picked up VICI Properties (VICI) on Thursday, which recently saw buys from its CEO and its President & COO. Shares of this gaming & entertainment properties REIT, which owns Caesars Palace in Las Vegas, are down 8% over the past month. Tracey considers both of these names to be steady picks in this volatile time. She added each with 10% allocations. Read the full write-up for more on all of today’s moves.

Home Run Investor: This volatile market has Brian looking to get defensive and add diversification in the portfolio, and he thinks the payments space is a good place to accomplish both. On Thursday, the editor added Evertec (EVTC), a Zacks Rank #2 (Buy) transaction processing company primarily focused on Latin America and the Caribbean. This stock has an excellent record of beating the Zacks Consensus Estimate, but the surprises have been small enough to stay under the radar. Earnings estimates for this year and next are also showing slow but steady advances. Brian also likes its valuation. Read the complete commentary for more on today’s addition of EVTC.

Income Investor: There are two things that Maddy really likes about Brookfield Infrastructure Partners (BIP), which owns and operates diverse global infrastructure networks. Firstly, it has almost no competition since its markets (energy, water, freight, passengers, data) have high barriers to entry. Secondly, it does not generate UBTI (unrelated business taxable income), which makes it good for a retirement portfolio. Furthermore, BIP has a “rock solid” dividend yield of 4.55% and has gained more than 30% this year with a goal for long-term returns of 12% to 15%. Read the editor’s complete commentary for more on this new addition.

Until Tomorrow,
Jim Giaquinto

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