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Stocks Jump Off Lows but Still Slide for a Third Day

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The market nearly made a spectacular comeback from morning weakness on Thursday, but slight declines ultimately pushed its losing streak to three sessions.

The Dow was down by over 300 points earlier in the day and managed to narrow that loss to within 20 points by the closing bell. But it was still in the red, having slipped 0.07% to 28,494.20.

The NASDAQ led the losses for a second consecutive session by dipping 0.47% (or nearly 55 points) to 11,713.87, while the S&P was off 0.15% to 3483.34.

We had a rough start in the a.m. when jobless claims for last week reached 898,000, which was more than expectations of somewhere around 825K to 830K. It was also more than last week’s 840K.

Jobless claims have become a big deal during this pandemic, but it’s even more important now because it reminds the market that we still don’t have a stimulus deal. The recovery doesn’t appear as vibrant as it once was, so some help from Washington would sure be nice.

Unfortunately, there’s not much to report in that regard. The two sides are still talking… those talks are still “productive”… and there’s still nothing to show for it.

Treasury Secretary Mnuchin said it would be “difficult” yesterday to reach a deal before the election, but the market remains hopeful that something will get done as soon as possible.

In the meantime, investors are also dealing with earnings season. Morgan Stanley (MS) became the latest financial to go to the plate, reporting a solid quarter that sent shares higher by 1.3%.

Results from the space have been mixed, but Thursday was a pretty good session for three of the country’s biggest banks. Bank of America (BAC) rose 2.2%, while JPMorgan was up 1.5% and Citigroup (C) rose by nearly 1.4%.

Goldman Sachs (GS), which had one of the better performances this season, was down over 1%. Wells Fargo (WFC) slipped 1.3%.

Despite these three days of losses, the rally on Monday was very solid. In fact, it was so strong that the NASDAQ and S&P are still going into Friday’s session with gains for the week. And the Dow is only off by about 0.3%. 

Today's Portfolio Highlights:

Surprise Trader: Another day of selling convinced Dave to take the rest of his eGain (EGAN) profit, which was sold today for a very nice 50% return in less than two months. The first half of this customer engagement solutions provider was sold last week for a return of approximately 31%. The new buy is Sonoco Products (SON), a Zacks Rank #2 (Buy) provider of consumer packaging, industrial products, protective packaging and supply chain services. The company, which shouldn’t be confused with the oil & gas name, has a positive Earnings ESP heading into the report before the bell on Thursday, October 22. The editor put the portfolio’s remaining cash into SON. See the full write-up for more on today’s action. In other news, shares of Sleep Number (SNBR) jumped 11.3% today after a solid third-quarter report, which means this portfolio had one of the top performers of the day among all ZU services.  

Healthcare Innovators: A failed experimental drug trial sent shares of Vertex Pharma (VRTX) plunging by more than 20% on Thursday. However, this company’s all-star is its best-of-breed cystic fibrosis commercial operations, which should break though $6 billion in sales soon. Today’s setback had nothing to do with this blockbuster, which means Kevin sees a great opportunity. He bought VRTX today and suggests you do the same with a small initial position, so you could add more if investors continue getting flushed out. VRTX is a Zacks Rank #2 (Buy) with estimates that have jumped 10% in the past two months. In other words, it’s a bargain. Read the complete commentary for more, along with some analyst reactions to this morning’s plunge. By the way, this portfolio also had a top performer today as Anavex Life Sciences (AVXL) rose 9.45% after one of its drugs passed a clinical trial.

All the Best,
Jim Giaquinto

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