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Dow Stays Positive Ahead of Powell Speech

Jim Giaquinto

The major indices each head into Friday’s session with gains of more than 1% for the week, putting them in a great position to finally snap their three-week losing streaks.

However, there’s a big question mark coming tomorrow as Fed Chair Jerome Powell is scheduled to speak at the annual Jackson Hole Symposium.

Investors are insisting another rate cut at next month’s meeting, so anything even remotely hawkish could spoil this week’s gains on the last day.

As for Thursday’s session, the market fought through another bond yield inversion to end with slight moves and mixed results.

A day after surging 240 points, the Dow managed to recover from the morning selloff and stay in the green when all was said and done. However, it was only up by 0.19% (or nearly 50 points) to 26,252.24.

The S&P looked like it would also recover enough to finish on the plus side, but ended with a slight loss of 0.05% to 2922.95. The NASDAQ came well of its lows as well, but stayed below breakeven all day and finished with a decline of 0.36% (or less than 30 points) to 7991.39.

The Fed minutes released yesterday didn’t have much of an impact on stocks, but it did let us know just how divided the Committee is on future rate cuts.

As Neena points out below, a couple Fed officials came out with hawkish statements today, which wasn’t welcomed by investors since more than 90% of them are expecting another cut in September.

So Thursday was one of those ‘wait-and-see’ sessions. Stocks bounced around again, but there wasn't a lot of volume due to the big blind spot hovering over the market. Perhaps Mr. Powell can clear things up tomorrow and help stocks end their three-week skid.

Today's Portfolio Highlights: 

Surprise Trader: Shares of Corporacion America Airports (CAAP) sold off earlier this month on those Argentine primary election results. However, this private sector airport operator has come off the lows under $5 and now has an impressive Earnings ESP of 132.4% for the quarterly report scheduled before the bell tomorrow. Last time, CAAP beat the Zacks Consensus Estimate by nearly 150%. Furthermore, this Zacks Rank #2 (Buy) is part of a space (Transportation – Airline) that’s in the Top 13% of the Zacks Industry Rank. The editor added CAAP on Thursday with a 12.5% allocation, while also selling CACI International (CACI) for a 2.8% profit in just about 10 days.

Technology Innovators: Shares of MobileIron (MOBL) are “only a short hop, skip and a jump away” from a new 52-week high, according to Brian. This Zacks Rank #2 (Buy) provides security and management solutions for mobile applications, content and devices. Looking forward, the editor sees positive earnings for the company in 2020 and noticed that margins have been improving over the last few quarters though remains negative for now. He also thinks that M&A in the space can “only serve to help this stock as the M&A premium for all tech names is going to inch a little higher”. Read the complete commentary for a lot more about this new addition. 

ETF Investor: "The inversion occurred after a couple of Fed officials signaled that the central bank may not cut rates as aggressively as expected by the market. Fed officials and leading economists are holding their annual meeting in Jackson Hole, Wyoming, and we will hear from the chairman Jay Powell tomorrow.

"Esther George, the Kansas City Fed president, and Patrick Harker, the Philadelphia Fed president said in TV interviews this morning that they see little reason for further rate cuts. George had voted against the July rate cut and reiterated that it wasn’t necessary.

"Minutes of the FOMC July meeting that were released yesterday, showed that the committee members were divided on the monetary approach. Most Fed officials saw 25 basis point cut as a “recalibration” while some were in favor of a 50 basis point cut."
-- Neena Mishra

All the Best,
Jim Giaquinto

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