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Better Than Last Monday, but Still Down Over 1%

The weekend didn’t improve the market’s recent trade jitters, as the major indices returned to work on Monday and slumped more than 1%. 

The Dow dropped 1.48% (or nearly 390 points) to 25,897.71. The S&P slipped 1.22% to 2883.09 and the NASDAQ was off 1.25 (or about 95 points) to 7863.41. 

Stocks managed to come off their lows late in the session. 

We had a MUCH better Monday than last week, which was the worst day of 2019 so far. The indices plunged around 3% or more on China allowing the yuan to devalue against the dollar. The market did a great job at paring those losses to about a half percent by Friday. 

It looks like we’ll be playing from behind again this week… though with a much slimmer deficit. 

Stocks have been volatile since the beginning of the month when President Trump threatened an additional 10% tariff on $300 billion worth of Chinese goods. It reiterated just how far the two sides are from any kind of trade deal, and the worsening Hong Kong protests could further complicate and delay any negotiations. 

For example, if China decides to use their military to confront the protestors, then it could mean an end to the trade talks planned for September.  

All of these trade issues are exacerbating concerns of slowing growth around the world. On Monday, we saw bond yields continue to move lower while the 2-year and 10-year treasury yields are getting closer to inverting. 

So the market’s got a lot on its mind right now. 

Will there be anything this week to give it some relief? Maybe. Earnings season is coming to an end, though we’ll still see reports in the coming days from Cisco, Wal-Mart and Nvidia. We’ll also be getting reports on CPI and retail sales. 

However, will good news on these fronts be enough to soothe the market’s nerves? And let’s not forget that a rogue headline or Tweet out of nowhere could end up having the biggest impact. 

Brace yourselves… this week could be a bumpy ride!  

Today's Portfolio Highlights:

Stocks Under $10: Earnings estimates at A10 Networks (ATEN) are on the rise for the current quarter, the current year and next year, which has really captured Brian’s attention. In fact, the Zacks Consensus Estimate for 2019 has moved to a four-cent profit from a two-cent loss in just the past 30 days. ATEN is a Zacks Rank #2 (Buy) provider of software-based application networking solutions. It has beaten our earnings expectations in three of the last four quarters with an average surprise of approximately 180% over that time. The editor added ATEN on Monday and sold Camtek (CAMT) for a more than 13% return to make room. Read the complete commentary for more.  

Surprise Trader: Even though earnings season is slowing down, Dave still expects to add three names this week. He kicked things off today with a 12.5% allocation in CACI International (CACI), a Zacks Rank #2 (Buy) provider of IT and network solutions for defense, intelligence and e-government. As part of the Computer – Services space, it’s in the Top 10% of the Zacks Industry Rank. The company’s earnings trend has been strongly positive of late and the editor believes this will continue when it reports again after the bell on Wednesday. The stock has a positive Earnings ESP of 4.02% for the upcoming report. The portfolio also sold Avis (CAR) today. Read the complete commentary for more.  

Black Box Trader: Only three names were swapped out in this week’s adjustment. The stocks that were sold include:

• CBRE Group (CBRE, +3.5%)
• Alaska Air Group (ALK)
• DaVita (DVA)

The new buys that filled these open spots are:

• CVS Health Corp. (CVS)
• MasTec (MTZ)
• XPO Logistics (XPO)

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

All the Best,
Jim Giaquinto

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