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Stocks Take a Small Step Back

Jim Giaquinto

A late-day selloff spoiled the major indices' attempt at another modestly green day, as trade headlines took a backseat to earnings reports and testimony from the Fed Chief.

The Dow slipped 0.13% (or nearly 34 points) on Tuesday to 26,057.98, while the S&P was off 0.08% to 2793.90. The NASDAQ dipped 0.07% to 7549.3. The indices were each on the plus side very late in the session, but couldn't hold their ground into the closing bell.

As we await the meeting between President Trump and President Xi of China, the market's attention swings back to the waning earnings season. Home improvement giant Home Depot provided some pressure today as it fell short of fourth-quarter expectations and offered a soft guidance. Investors have been a bit concerned about a slowing economy and this type of report won't make them feel much better.

However, investors should be thrilled with the recent consumer confidence report, which jumped to 131.4 in February from 121.7 in January. That's quite a nice rebound after last month's malaise amid the government shutdown. It was also well above expectations.

Meanwhile, Fed Chair Jerome Powell was on Capitol Hill for one of his testimonies to Congress. In a nutshell, he said the economy is on solid ground but there are potential problems to watch, especially from overseas. Mr. Powell also said the Fed would adjust policy depending on the economic environment. In other words, he didn't say anything surprising, so there wasn't much of an impact on the market.

Today's Portfolio Highlights:

Stocks Under $10: In his latest move to diversify the portfolio, Brian Bolan added Superior Industries (SUP) on Tuesday. This Zacks Rank #2 (Buy) is an automotive company that makes aluminum wheels for cars and trucks. The stock has a solid history of topping Zacks Consensus Estimates with a four-quarter average of more than 150%. The next report is scheduled for March 7. The portfolio is getting into this name near its 52-week low but has made a series of higher highs over the past five days. Brian thinks SUP could be a big winner moving forward. Read the full write-up for more on this new pick.

Surprise Trader: Analysts may be expecting a slight loss for PlayAGS (AGS) in its quarterly report on March 5th, but Dave sees signs that the stock has been heating up lately. Not only does it have an Earnings ESP of nearly 43% for the upcoming quarter, but it also enjoys Zacks Style Scores of "A" for Growth and Momentum. Therefore, the editor added this designer/supplier of electronic gaming machines with a 12.5% allocation. He also sold American Superconductor (AMSC) today for a return of 11.7% in less than a month. Don't miss the complete commentary for more on today's moves.

ETF Investor: The software space is so hot right now that many economists believe it would continue to outperform even if the economy slows down. Neena wants some exposure to this industry, so she added the SPDR S&P Software & Services ETF (XSW) on Tuesday. This fund provides comprehensive coverage to several sub-industries, including Application Software, Data Processing & Outsourced Services, Home Entertainment Software, IT Consulting & Other Services, and Systems Software. Plus, XSW is one of the cheapest products in the space. Read the complete commentary for more on this new addition.

Zacks Short List:
There was only one swap in this week's adjustment, as the portfolio short-covered Continental Resources (CLR) for a 6% return and replaced it by adding Agnico Eagle Mines (AEM). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Have a Good Evening,
Jim Giaquinto

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