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NASDAQ Drops Another 2.7% as Bond Yields Rise Again

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March started out so positively with a solid rally across the board, but stocks have since pulled back in two consecutive sessions as bond yields move higher. The NASDAQ has now given back all of its 3% surge from two days ago… and then some.

The 10-year Treasury yield rose on Wednesday after steadying in the previous two sessions and came awfully close to 1.5% at its peak. Investors are still stinging a bit from the surge past 1.6% last Thursday.

If yields are going up, then you can bet that tech is going down. Case in point, the NASDAQ plunged 2.7% (or about 361 points) to 12,997.75. Along with yesterday’s nearly 1.7% slip, the index has now squandered the 3% rally on Monday and closed beneath 13,000 for the first time since January 15.

The FAANGs really took their lumps with Netflix (NFLX) plunging 4.95%, while Apple (AAPL), Amazon (AMZN) and Alphabet (GOOG) all dropped more than 2%. Facebook (FB) slipped 1.39%. Meanwhile, Microsoft (MSFT) was off 2.7%.

The S&P dropped 1.31% to 3819.72, while the Dow managed better than its counterparts since recovery names are performing pretty well at the moment. The index still slipped 0.39% (or about 121 points) to 31,270.09 despite being in the green for most of the session. These indices are still up for the week thanks to the Monday rally, but not by much.

The ADP report showed that private payrolls added 117,000 jobs in February, which was well below expectations north of 200K. The result is all the more disappointing since last month’s print of 174K was three times better than forecasts.

On the brighter side, its further proof that the $1.9 trillion stimulus bill in the Senate is still needed, though its kind of a moot point now as the relief is widely expected to pass sometime this month.

This isn’t the last we’ll be hearing about jobs this week. Tomorrow comes jobless claims, per usual, and then Friday brings the government employment situation report.

Today's Portfolio Highlights:

Home Run Investor: The portfolio had a busy Wednesday as it swapped out two positions, which involved selling SailPoint Technologies (SAIL) for a nice 88% return after slipping to a Zacks Rank #4 (Sell). Brian also sold Merit Medical Systems (MMSI) after going nowhere in the service in three months. The new buys are Radius Health (RDUS) and Primoris Services (PRIM). RDUS is a Zacks Rank #2 (Buy) that will maintain the service's healthcare exposure after dropping MMSI. The editor was most impressed with the huge move in estimates for next year to 88 cents from 45 cents, which would mark a return to profitability. PRIM is a Zacks Rank #1 (Strong Buy) construction name that beat in three of the last four quarters. Earnings estimates are rising here too and Brian considers it to be “a bargain”. Read the full write-up for more specifics on today’s action.

Insider Trader: Rates for rental cars are still low at the moment, but that will change once travel picks up later this year. Therefore, Tracey added Avis Budget Group (CAR) on Wednesday, a recovery play that’s up 60% in the past month. However, that epic advance did not keep the CFO from buying 6200 shares last week. In fact, this was his second buy of the month. When insiders buy rising stocks, Tracey finds it an especially bullish signal. The editor sold the weak MannKind (MNKD) position today and used its proceeds to buy CAR. The allocation comes to about 7%. Read the full write-up for more.

Surprise Trader: The tail end of earnings season is when we get a lot of retailers going to the plate, which is where Dave went for today’s addition. He picked up Zumiez (ZUMZ), a member of the highly-ranked (Top 26%) retail – apparel & shoes industry. The company has a positive Earnings ESP for the quarter being reported after the bell on Thursday, March 11. Last time it beat by over 52%. The editor added ZUMZ on Wednesday, while also selling Travere (TVTX) for a slight loss. Read the full write-up for more.

Healthcare Innovators: The market correction is raging right now and could get even more intense moving forward, so Kevin decided to sell a few positions on Wednesday. The big winner was Guardant Health (GH), which was sold for an approximately 80% profit in more than a year. The editor still thinks there’s upside to this diagnostics company, but it has slipped to a Zacks Rank #5 (Strong Sell) due to its guidance. He also cut his losses by selling Vaxart (VXRT) and Quidel (QDEL) today.  

Counterstrike: Amid the market’s “wacky” movement of late, Jeremy has been patient when it comes to new moves. But on Wednesday, he felt comfortable enough to buy twice and sell once. The editor picked up Anaplan (PLAN) and The Trade Desk (TTD) with allocations of 5% and 4%, respectively. PLAN is a Zacks Rank #2 (Buy) cloud platform for business applications, which is down sharply despite a strong quarterly report. TTD provides a technology platform for advertising, and it’s getting beaten up during all this tech weakness. The editor thinks both of these names are poised to bounce back moving forward. He also sold BJ’s Wholesale Club (BJ) today for a small loss. See the full write-up for more specifics on all of these moves.

TAZR Trader: Vaccine makers have been getting shellacked during all the praise for Johnson & Johnson’s recent single-dose treatment, but Kevin sees a buying opportunity. For example, Novavax (NVAX) has plunged 20% after its report, but a few firms have been raising their price targets on this biotech. The editor thinks this pessimism for vaccine makers is overdone and was willing to add NVAX on Wednesday with a small, 5% allocation to start. Read his full write-up for more.

Have a Great Evening,
Jim Giaquinto

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