S&P Retakes 3700 while NASDAQ Hits Another New Record
The market may still be waiting for a stimulus package at the moment, but it had enough energy on Wednesday to recapture a milestone and set a new record.
The S&P closed above 3700 for only the second time in history today. The index rose 0.18% to 3701.17, which put it a little more than a point away from a new record. It was last above 3700 on Tuesday, December 8.
Meanwhile, the NASDAQ climbed 0.50% (or about 63 points) to a new closing high of 12,658.19, but the Dow slipped 0.15% (or about 45 points) to 30,154.54.
The Fed – and its unprecedented support for this economy – isn’t going anywhere. In addition to keeping rates unchanged as was widely expected, the Committee will continue its asset purchase program unabated until its goals are met. And you can bet that rates will stay at historic lows for the next several years.
Meanwhile, the market is cautiously optimistic that Capitol Hill is finally on course for a relief package.
In recent days, we’ve seen the proposal split into two separate bills that should be easier to pass. Also, the major players in both houses of Congress have been talking and seem encouraged that something will actually get done.
This would be a great time to make it happen, as rising coronavirus cases are leading to renewed restrictions across the country.
Such measures are being felt in the economic data. We got another example just today when retail sales for November were down 1.1%, which was worse than expected and marked a second straight monthly decline.
And let’s not forget that the jobs data for November (released earlier this month) was quite sluggish with only 245K jobs being added instead of around 450K as expected.
So the economic recovery is certainly slowing down, but a nice stimulus deal could keep it going while we wait for the vaccines to do their job...
Today's Portfolio Highlights:
Income Investor: Investment bankers like Goldman Sachs (GS) are handling this pandemic better than most other banks. Shares of the company surged 74% since the coronavirus lows, which easily outperformed the S&P. In addition, GS had a “blowout” third quarter and is diversifying for the future through initiatives like consumer banking. And yet, GS is still “just too cheap to ignore”, according to Maddy. Shares trade at 10x trailing 12-month earnings, compared to the finance market’s 18x. And its dividend currently yields just under 2.1% on an annual basis with a payout ratio at 21%, so there’ll be no problem covering payouts or planned increases moving forward. To recap: GS has market-leading positions, a diversifying revenue stream, top-tier profit levels and a solid dividend. And despite all that, it remains at “bargain basement levels”. No wonder the editor added the stock on Wednesday. Learn a lot more about this new addition in the complete commentary.
Home Run Investor: Next year could be pretty strong for a name like Sterling Construction (STRL), which is a leading heavy civil construction company that specializes in the building and reconstruction of transportation and water infrastructure projects. In other words, it would be a big beneficiary of any federal infrastructure plans. The past two quarters included large earnings surprises, while rising estimates have lifted STRL to a Zacks Rank #1 (Strong Buy). If this stock sees some margin expansion, Brian thinks it would move sharply higher. In addition to adding STRL, the editor also sold The Andersons (ANDE) after slipping to a Zacks Rank #4 (Sell). The agriculture company still brought the portfolio a return of approximately 10.2% in two months. Read the full write-up for more on today’s moves. In other news, this portfolio had a top performer on Wednesday as Dynatrace (DT) rose 8.3%.
Counterstrike: This portfolio’s patience with Turtle Beach (HEAR) paid off on Wednesday, as the audio technology company was sold for a return of about 38%. Jeremy first bought the stock on July 13 and then added to it on August 17. The long awaited-for spike finally came and lifted HEAR to the top performer in the portfolio. Also today, the editor bought beverage company National Beverage Corp. (FIZZ) with a 7% allocation and added onto e-commerce service provider Overstock.com (OSTK) with a 6% allocation. FIZZ, which made 22% for the portfolio last month, had a nice pullback recently and seems set to move higher. Meanwhile, OSTK, which was first bought on November 24, has moved higher in the past couple of days and prompted Jeremy to make a bigger commitment. Read the complete commentary for a lot more about today’s moves.
All the Best,
Jim Giaquinto
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