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Stocks Bored by the Fed

Jim Giaquinto

There wasn’t much happening on the day after the Fed’s second rate cut of the year, but the major indices still go into Friday’s session with the chance for another week in the green.

Stocks started the day higher, but then ran out of steam by the close. The best performer was the NASDAQ, which managed a gain of only 0.07% (or about 5 points) to 8182.88.

The S&P broke even but technically inched higher by 0.06 of a point to 3006.79.

The Dow really lost its way and finished lower by 0.19% (or about 52 points) to 27,094.79.

Stocks had a muted reaction the past two days to the Fed cutting rates by another quarter-point. The result was too widely expected and Chair Jerome Powell didn’t go overboard on dovishness.

Sometimes, the market needs to sleep on it before really rallying. But not this time! The decision and comments from the Fed meeting proved to be anticlimactic and weren't enough to break the market out of its range.  

Fortunately, despite today’s sluggishness, the indices still have a good chance of putting together another winning week.

The NASDAQ goes into Friday’s session higher over the past 4 days, while the Dow and S&P are only down by 0.5% and 0.02%, respectively.  

A strong close tomorrow would mark the fourth straight week in the green, which would be a nice response to the four-week losing streak that dominated most of August.

And we’re still pretty close to new highs as well, with the Dow and S&P each less than 1% from making history.

But if the Fed isn’t going to help stocks pick the right direction, then it may be up to the next big events for the market.

Unfortunately, trade talks and earnings season are a lot more unpredictable than the Fed. 

Today's Portfolio Highlights:

Counterstrike: With the market approaching all-time highs, Jeremy wanted to make a few changes to the portfolio. He added 4% allocations to Paycom (PAYC) and Smartsheet (SMAR) each. These stocks were both originally added on September 11 during the rotation out of momentum. PAYC never had to test its 200-day and SMAR is above its 200-day and seemingly on its way to surpassing its 50-day. Read more about all of today’s moves in the complete commentary. 

TAZR Trader: Fortune 1000 companies know all about Twilio (TWLO), and now so will you. Kevin added this cloud-based communication platforms company on Thursday with a 7% allocation. It's growing sales by more than 70% this year to over $1 billion, while trading at only 10X next year's $1.5B consensus. The editor had this one on his "buy list" closer to $100 but was inspired to act today by an upgrade from a major brokerage who sees TWLO’s tools and improvements as the “next leading wave of customer service and engagement”. He thinks TWLO might be able to reach its 50-day near $130 soon. Read the full write-up for a lot more on this new addition.  

Technology Innovators: The portfolio was a couple positions shy of an ideal 15 this morning, so Brian added Perspecta (PRSP) on Thursday. This company is an IT services name that the editor really likes right now. First of all, it has an excellent history of beating the Zacks Consensus Estimate, having done so for four straight quarters with an average surprise of around 7%. Also, PRSP is enjoying rising earnings estimates, which underscores its status as a Zacks Rank #2 (Buy). But Brian really appreciated its topline growth of 39% on sales of only 1x sales. The editor expects this name to roll over the 52-week high in short order. Read the full write-up for a lot more on today’s addition of PRSP.

All the Best,
Jim Giaquinto

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