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Stocks Rebound and Hang Onto Recent Gains

Jim Giaquinto

The major indices recovered from a soft morning to post slight gains on Thursday, but it’s going to take a much more energetic rally tomorrow to end this week in the green.

The Dow and NASDAQ head into Friday with weekly losses of more than 1%, while the S&P is off about 0.7%.

We’ve been getting conflicting reports on the Phase 1 trade deal all week long. And stocks are responding to EVERYTHING as tensions rise the closer we get to the Dec 15 deadline for additional tariffs.

Therefore, we’ve had an erratic start to the month after a strong November with numerous new highs for the indices. Stocks had a nice little rally on Wednesday and managed to hang onto all of it with slight gains today.

The S&P rose 0.15% to 3117.43, while the Dow advanced 0.10% (or about 28 points) to 27,677.79. The NASDAQ inched forward by 0.05% (or a little more than 4 points) to 8570.70.

That’s back-to-back gains (barely) coming right after a three-day losing streak that saw the indices shed about 2%.

The market also needed to deal with some soft economic data in recent days, including ISM Manufacturing, ISM Services and ADP Employment.

However, the big news comes tomorrow with the Government Employment Situation report. A strong reading could give the market a nice finale to the week, and today’s US weekly jobless claims suggests that we just might get that positive number.

Of course, a trade headline could come out of nowhere and be the biggest difference. 

Today's Portfolio Highlights:

Surprise Trader: Talk about a quick turnaround! On Thursday, Dave added American Outdoor Brands (AOBC), which reports after the bell TODAY! This Zacks Rank #2 (Buy) manufactures and sells firearms and accessory products for the shooting, hunting and outdoor enthusiast. It’s most widely known as the parent company of Smith and Wesson. AOBC has a positive Earnings ESP of 37.5% for the quarter coming late today and is part of a space (Leisure & Recreation Products) in the top 7% of the Zacks Industry Rank. The editor added AOBC with a 12.5% allocation and sold the sluggish Realogy (RLGY) position for an approximately 2% return. Read the full write-up for more. UPDATE: Shares of AOBC are up more than 5% afterhours as of this writing after the company beat on the top and bottom lines for its fiscal second quarter.

Income Investor: It’s bad enough that shares of Old Republic (ORI) have been trending lower for the past few months, but it’s even worse that this insurance holding company has slipped to a Zacks Rank #4 (Sell). Despite the stock still being cheap, Maddy doesn’t see much potential for the near-term. Therefore, she sold ORI on Thursday and collected a nice 46% return.

Healthcare Innovators: The road toward commercial stage drugs is a long one and very expensive. bluebird bio (BLUE) is a biotech going down that path right now as it develops gene therapies for severe genetic diseases and cancer. However, analysts are looking past the short-term troubles to the real potential for this name moving forward. Kevin also likes BLUE’s potential, which is why he added the stock on Thursday. The editor also sold the underperforming Tabula Rasa Healthcare (TRHC) and Invitae (NVTA). Read the full write-up for a lot more on today’s moves.

All the Best,
Jim Giaquinto

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