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S&P Still Stuck Just Below Record Heading Toward CPI

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The market is so slow right now that the S&P has been unable to advance less than 10 points this week and make a new all-time high. The major indices remained stuck in their ranges on Wednesday while waiting for a catalyst to break them out. Will it come tomorrow?

The S&P began the week approximately 0.2% away from making history, but the summer swoon has begun as investors wait for some clarification on inflation and other question marks. So despite spending most of day in the green, the index eventually declined 0.18% in the session to 4219.55. The all-time high from May 7 is at 4238.04.

The Dow now has a three-day losing streak after slipping 0.44% (or a little more than 150 points) to 34,447.14. The NASDAQ outperformed its counterparts for the fourth consecutive time, but was still off by 0.09% (or about 13 points) to 13,911.75.

All of the indices sold off into the close and finished the day near their lows.

Tomorrow might provide the catalyst that gets the market moving again. The CPI is scheduled to be released on Thursday and expectations are for consumer prices to have jumped 4.7%. Last month, the print was 4.2%, which led to one of the worst sessions of the year (May 12) with each of the major indices plunging by 2% or more.  

The problem wasn’t the 4.2%, though, as investors are well aware that inflation is on the rise. The market reacted negatively to the result soaring past expectations of only 3.5%. The forecast for tomorrow appears to have much more breathing room.

“A hot number will likely cause some selling, while a number coming in as expected or below expectations will help all-time highs hit before the market even opens. My feel is that the later scenario will play out,” said Jeremy Mullin in Counterstrike.

And let’s not forget that Thursday also means jobless claims, which have been on a roll recently with several consecutive weeks of pandemic lows. Last week, it dipped below 400K for the first time since covid and beat expectations.

Meanwhile, the meme stocks continue making news, but the market is taking it more in stride this time rather than hyperventilating as it did earlier this year with names like GameStop. Speaking of GME, the company beat on both the top and bottom lines in its first-quarter report after the bell today. The stock is off by more than 6% afterhours (as of this writing), which doesn’t make much of a dent in its approximately 1500% surge this year.

Today's Portfolio Highlights: 

Home Run Investor:
People are heading back out to restaurants now that covid is losing its grip, so Brian added a reopening play on Wednesday to take advantage. The One Group (STKS) owns 21 STK Restaurants, 24 Kona Grill Restaurants and also provides a hospitality service to 12 locations. The company has beaten three times and matched once over the past four quarters with an average surprise of 88%, while rising earnings estimates makes it a Zacks Rank #2 (Buy). The valuation is “a little rich here”, but the editor is more taken by the 24% topline growth in the most recent quarter and the 62% projected for this year. Since the portfolio is full, Brian needed to make some room for new buys. He sold Lithium Americas (LAC) for a nice 18.5% return in less than six months after the company “lost a lot of its charge” of late. The service also sold Radius Health (RDUS) and Sapiens (SPNS) for losses. Read the full write-up for more on today’s moves and be ready for another buy tomorrow.

All the Best,
Jim Giaquinto

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