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S&P, NASDAQ Rise for the Week Despite Friday Drop

Jim Giaquinto

A rough Friday session ruined the Dow’s chance for another positive week, but the other major indices managed to a hang on as we closed out an encouraging start to earnings season.

The S&P started the day a little more than 2 points away from 3,000, but recapturing that milestone is proving to be difficult. The index slipped 0.39% on Friday to 2986.20.

The NASDAQ dropped 0.83% (or about 67 points) to 8089.54. Shares of Netflix plunged more than 6% as it appears the honeymoon is over for its initially well-regarded Q3 report.

Regardless of the numbers for the streaming pioneer, investors are concerned how it will perform in an increasingly competitive landscape after the arrival of services from Apple, Disney and several others.

The Dow got the worst of it today with a slide of 0.95% (or more than 255 points) to 26,770.20. But to be fair, most of that deficit stems from a nearly 7% loss at Boeing after a story that the airplane giant misled federal authorities on the safety of the 737 Max.

The index also got beaten up by a more than 6% plunge from Johnson & Johnson, after recalling some baby powder due to traces of asbestos.

The Dow came into the session with a slight gain for the week, but finished lower by 0.2%.

However, even with today’s soft session, the S&P rose 0.5% for back-to-back weekly gains, while the NASDAQ now has a three-week winning streak after a rise of 0.4% over the past 5 days.

The big story of this week, though, was the stronger-than-expected start to earnings season. Investors were concerned we’d see some cracks in the world’s strongest economy. However, solid reports from several big banks, Netflix and numerous other companies have calmed those skittish investors a bit.

Of course, it’s early in the season, but another solid week may finally get the S&P past 3,000 and maybe even onto new highs before the year is out. We’ll see a lot of big names report next week, including Microsoft on Wednesday an Amazon on Thursday.

And one more thing. When we get back to work on Monday, there may actually be a Brexit deal! We already know that the U.K. and EU finally hammered out an agreement after three years. What we don’t know is whether or not Parliament will vote for it on Saturday.

Today's Portfolio Highlights:

Counterstrike: The 200-day for Alteryx (AYX) has finally been breached, which is exactly what Jeremy was waiting for. This Zacks Rank #1 (Strong Buy) data analytics software company had been hot all year, but dipped on valuation concerns along with several other software and data names. Now it has slipped into the editor’s target area, so he added AYX on Friday with a 12% allocation. He likes the potential for a relief bounce back into the triple digits after its quarterly report in a couple weeks. Read the full write-up for more on this new buy, including a look at its chart.

Stocks Under $10: Sticking with his plan of getting more aggressive, Brian added Owens & Minor (OMI) on Friday. This global healthcare solutions company also adds some diversification to the portfolio. It beat by 42% in its most recent quarter and has an attractive valuation. The editor was most impressed when a big buyer stepped in this morning to halt a decline in the stock, which suggests that there’s support. Brian thinks this Zacks Rank #1 (Strong Buy) could see double digits in the near future. The portfolio also sold Immersion (IMMR) for a slight gain. Read the complete commentary for more on today’s moves.

Surprise Trader: It’s a good time for the homebuilders thanks to this low rate environment and strong job market. In fact, the space is in the Top 5% of the Zacks Industry Rank. Dave plans to capitalize on this hot area with a 12.5% allocation in Meritage Homes (MTH), a Zacks Rank #1 (Strong Buy) designer and builder of single-family homes. The company beat by more than 27% last quarter and has a positive Earnings ESP for the report coming after the bell on Tuesday, Oct 22. Read the full write-up for more.

Value Investor: "The S&P 500 keeps hovering right around its record high but can't seem to break through. 

"Next week's earnings, though, could be a big catalyst. This week was just the warm up as Microsoft, Caterpillar, Visa, Amazon and other big S&P 500 companies will be reporting next week. 

"The bulls are still in control, despite Friday's pullback. I'm looking for better-than-expected reports again next week. 

"The S&P 500 could see its break out next week. Stay tuned."
-- Tracey Ryniec 

Have a Great Weekend!
Jim Giaquinto

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