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Dow Surges More Than 800 Points on Encouraging Vaccine Data

SPECIAL ALERT: The latest episode of the Zacks Ultimate Strategy Session will be available for viewing no later than this Wednesday, November 11. Kevin Matras, Dr. John Blank, David Bartosiak and Sheraz Mian will cover the investment landscape from several angles in this informative event.

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▪ Sheraz and David Agree to Disagree on the sectors best positioned to perform in 2021 and beyond
▪ Kevin answers your questions in Zacks Mailbag
▪ Sheraz and John choose one portfolio to give feedback for improvement
▪ And much more

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The market showed where its heart is on Monday... and it’s not in Washington.

News of a potential breakthrough on a coronavirus vaccine sent the Dow and S&P into record territory, before slumping back a bit as the “stay at home” stocks and the “recovery” names went their separate ways.

Nevertheless, the Dow still rose 2.95% (or approximately 834 points) to 29,157.97. It had been up twice as much earlier in the day.

Meanwhile, the S&P advanced 1.17% to 3550.50, but the NASDAQ slipped 1.53% (or about 181 points) to 11,713.78.

The Dow and S&P are adding onto fantastic starts for November, which included gains of 6.9% and 7.3%, respectively, last week. The NASDAQ gave back a little of its 9% surge over the same time period.

It appears that the vaccine being developed by Pfizer (PFE, +7.7%) and its partner BioNTech is 90% effective in prevented covid. 90%!!!

If the vaccine had been 50% or 60% effective, it would be considered a major development in fighting the pandemic. But a 90% success rate suggests that this whole nightmare could be over in the near future.

It’s no wonder why cruise lines such as Carnival (CCL) and Royal Caribbean (RCL), which have become representative of companies most impacted by the shutdowns, surged approximately 39% and 29%, respectively, in the session.

At the same time, companies that prospered during the pandemic got beaten up today, including Zoom Video Communications (ZM, -17.4%) and Netflix (NFLX, -8.6%). Such pullbacks explain why the NASDAQ couldn’t stay on the positive side and ended sharply lower.

But let’s not get ahead of ourselves. Even if everything with this vaccine goes perfectly, we’re still months away from it being widely available to the public.

And when was the last time everything went perfectly?

Nevertheless, it’s the best news we’ve received in a long time. And Pfizer should have the ability to distribute it on a wide scale.

So let’s take a deep breath and keep our fingers crossed...

Today's Portfolio Highlights:

Surprise Trader: This portfolio enjoyed three double-digit gains on Monday as the market soared on positive vaccine news. However, Sleep Number (SNBR) was not among them. Dave thought it was a good time to sell the rest of this sleep technology company and secure a nice 14% return in just a little over a month. Most of the position was sold after its quarterly report back on October 20 for a more than 17% gain. The new buy is battery maker Energizer Holdings (ENR), which has a positive Earnings ESP of 1.67% for the quarter coming after the bell on Thursday, November 12. There have been some big market reactions to this
company’s earnings reports in the past. The editor added ENR on Monday with a 12.5% allocation. Read the full write-up for more on today’s action.

TAZR Trader: The positive vaccine news from Pfizer sent the market sharply higher on Monday, but ironically the companies that specialize in covid testing did not come along for the ride. In fact, they plunged as if the vaccine was hitting the street today. For example, Quidel (QDEL) was off more than 26%. Needless to say, this is quite a dramatic overreaction and, therefore, a fantastic buying opportunity. We’re still going to need testing capabilities for a long time. Kevin added more to the QDEL position on Monday. You probably remember that he sold half of QDEL just last week for a nice 63.5% profit in a little over two months. Even after today’s rather ridiculous plunge, the stock is still one of the best performers in the service.

Large-Cap Trader:
This portfolio had the top three winners of the day among all ZU names... and all of them were double-digit gainers amid a strong day for the market. These big advances came from US Foods Holding (USFD, +29%), Howmet Aerospace (HWM, +19%) and Halliburton (HAL, +17.1%). HWM is also the best performer in the service with a rise of more than 74% since being added six months ago.

Black Box Trader:
Half of the portfolio was refreshed in this week’s adjustment, and two of the changes brought double-digit returns. The stocks that were sold today included:

• Tapestry (TPR, +53.8%)
• Mattel (MAT, +11.8%)
• FedEx (FDX, +9.7%)
• Big Lots (BIG)
• Bunge (BG)

The new buys that filled these spots were:

• Builders FirstSource (BLDR)
• Flex Ltd. (FLEX)
• KBR, Inc. (KBR)
• Performance Food Group (PFGC)
• Realogy Holdings (RLGY)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Have a Great Evening,
Jim Giaquinto

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