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Dow Pushes Forward Under Apple's Shadow

Jim Giaquinto

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The Apple report loomed large over Tuesday’s session even though it didn’t come until after the bell. Nevertheless, the Dow still managed a positive performance, though its counterparts didn’t come along for the ride.

Regarding Apple, shares of the iPhone maker are up approximately 6% after hours, as of this writing. The numbers may not have been very “Apple-like” historically speaking, but neither were they the disaster many had feared after the reduction of its Q1 guidance earlier this month. Earnings and revenue both exceeded expectations slightly. iPhone revenue was down a bit, but services revenue beat.

Back to today’s action, the Dow bounced around but finished higher by 0.21% (or about 51 points) to 24,579.96. 3M reported better-than-expected results that provided a little solace to those afraid for the industrials after Caterpillar’s soft showing on Monday. Even CAT itself recovered approximately 1.7% of yesterday’s loss.

However, in a week where tech takes center-stage, the NASDAQ was still dealing with NVIDIA’s recent warning and biting its fingernails over Apple. The index was off 0.81% (or more than 57 points) to 7028.29. The S&P saw some green in the session, but eventually declined 0.15% to 2640.

The weather may be beyond freezing here in Chicago, but this week is just heating up in the market. It’ll be interesting to see how stocks react to the Apple news during an actual trading session, but there won’t be much time to take a breath as other tech bigwigs like Microsoft, Amazon and Facebook are scheduled to report. Remember, the NASDAQ has a 5-week winning streak, and its going to have to start making up lost ground after a nearly 2% loss in the past two days if it wants to keep it alive.

We’ll also see a Fed policy decision tomorrow. It’s not expected to bring any rate changes, but the market will be watching the language intently for any hints on what their plans are moving forward. And if that wasn’t enough, China’s Vice Premier Liu He already arrived in Washington to begin trade talks with White House officials that could include President Trump. This is quite a step up from the “mid-level” discussions earlier. It would be great if we could get some positive headlines or maybe even a real deal as the deadline approaches. Fingers crossed… 

Today’s Portfolio Highlights:

Surprise Trader: It’s earnings season… so Dave plans to add a position each day this week. The most recent buy comes from the highly-ranked Aerospace – Defense industry, which is in the top 18% of the Zacks Industry Rank. Northrop Grumman (NOC) hasn’t missed earnings estimates since April 2015, and its Earnings ESP of 2.02% suggests that it will beat again at its next report on Thursday before the bell. The editor likes how NOC has a tendency to react well to these positive surprises, so he added the stock on Tuesday with a 12.5 allocation. Read the full write-up for more on today’s moves.

Zacks Short List:
The portfolio swapped out four names in this week’s adjustment. The stocks leaving the service after being short-covered include:

• Baidu Inc. (BIDU)
• National Oilwell Varco (NOV)
• GrubHub (GRUB)
• Tencent Holdings (TCEHY)

The new buys that replaced these names are:

• China Lodging Group (HTHT)
• Ctrip.com Int'l (CTRP)
• Incyte Corp. (INCY)
• Tesla (TSLA)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Counterstrike: "All eyes were on Apple tonight as the company was set to report perhaps once of the biggest earnings announcements of the quarter. After production cuts earlier in the month, the stock has been fairly weak. However, a beat on both the top on bottom lines, albeit barely, helped the stock head 5.5% higher.

"The stock traded higher because there were some extreme fears that the company would miss and perhaps guide much lower than it did. But because the numbers “weren’t that bad” it gave reason to buy. Tomorrow should be a good tech day as long as Apple can hold its gains.

"Apple saves the day! Let’s see how the market reacts in the morning, but I would think the market will like this. Lets just not get too excited until we get past the Fed, China trade, and a couple big more earnings reports."
-- Jeremy Mullin

Have a Great Evening,
Jim Giaquinto

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