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Stocks Rise Over 1% in First Week of July

Jim Giaquinto

Stocks pulled back from record highs in this post-holiday session, but they still finished this abbreviated week with solid gains.

The NASDAQ jumped nearly 2% this week, while the Dow and S&P each rose well over 1%.

The major indices broke three-week winning streaks last Friday, but it was overshadowed by an extremely strong month of June.

And now the market has started July on the plus side.

As for Friday though, the S&P ended three consecutive sessions with new highs by dipping 0.18% to 2990.41.

Meanwhile, the NASDAQ slipped 0.10% to 8161.79 and the Dow was off 0.16% (or nearly 44 points) to 26,922.12.

The Dow had plunged by more than 230 points at its worst, while the other two major indices also dropped sharply at the open before mostly recovering throughout the session.

The good news is that the economy blew past expectations and added 224,000 jobs in June, which should help concerned investors relax a bit regarding slowing growth.

The bad news is that the economy blew past expectations and added 224,000 jobs in June, which investors fear may keep the Fed from a widely-expected rate cut later this month.

You’ll remember that the market wasn’t too concerned with the surprisingly weak reading for May, when the economy added only 75,000 jobs. That result missed expectations by more than 100,000.

But jobs came roaring back in June to beat expectations of 165,000, leaving the market in a bittersweet mood to finish the week.

If you’re tired of all this Fed stuff and the market obsessing over an upcoming rate cut… well that’s just too bad! Because we’re getting more of it next week.

Fed Chair Jerome Powell is scheduled to testify in front of the House Financial Services Committee on Wednesday and then the Senate Banking Committee on Thursday.

So this market will still be biting its fingernails at every word Mr. Powell says (or doesn’t say) for a while longer.

Today's Portfolio Highlights:

Options Trader: The chart for Science Applications International Corp. (SAIC) has a bullish pennant formation, which Kevin sees as a signal of an imminent breakout. This Zacks Rank #2 (Buy) is engaged in transaction, technical engineering and enterprise IT services for both the government and commercial customers. Sales are projected to grow 41% and earnings estimates are on the rise across the board, yet SAIC still has an attractive valuation. The editor sees a price target of 97.20 moving forward, so he bought to open 4 August 90.00 Calls on Friday. Read the complete commentary for more specifics.

Counterstrike: "The jobs report was strong, very strong, coming in at 220k vs the 160k expected. This was somewhat of a shock and brought some selling into the market and into the metal space. Those that expected the Fed to raise 50 basis points now felt silly, as a strong jobs report will likely keep the Fed at a 25 cut. Some might even question if a cut is needed at all, but FedWatch still has the probability of a cut at 100%.

"So what we have here is a market totally dependent on what the Fed will do come the July rate decision. With earnings coming in hot around the same time, the next two months could get very interesting. Next week things will pick up as Fed Chair Powell will go to Capital Hill for two days of testimony.  

"Enjoy the weekend and let’s focus on earnings next week. I think a lot of the noise over the next few weeks will be Fed related, but the real mover in individual stocks will be earnings. I think there will be plenty of buying opportunities coming the rest of the summer, you just have to be patient and wait for the algos to knock them down to buyable levels."
-- Jeremy Mullin

Have a Great Weekend!
Jim Giaquinto

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