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Rally Resumes as Auto Tariffs Delayed

We all knew that daily trade tidbits would have a big impact on the market moving forward. And that’s exactly what we saw on Wednesday.

Stocks were on their way to giving back all of yesterday’s relief rally after a weak open. But the tide turned dramatically after news reports stated that President Trump might delay auto tariffs for up to six months.

As a result, the market managed a second straight day of gains.

The NASDAQ jumped another 1.13% (or about 87 points) to 7822.15, which is almost exactly the same as yesterday’s 1.14% advance. But it’s still down more than 1% for the week after Monday’s 3.4% plunge.

Tech had a good day once again. Each of the FAANGs was solidly in the green, led by a nearly 4% rise for Alphabet after Deutsche Bank raised their price target.

The S&P climbed 0.58% to 2850.96 and the Dow recovered from a nearly 200-point loss to gain 0.45% (or nearly 116 points) to 25,648.02.

The indices have recaptured about two-thirds of the losses from Monday’s sharp selloff, though they did lose some ground in the final hour.

In addition to ongoing trade worries, the market also reacted negatively to a 0.2% dip in retail sales for April. Expectations were for a gain of 0.2%. The longer this trade conflict continues, the more investors are going to worry that it impacts this strong economy.

Nevertheless, trade was the reason that stocks reversed course on Wednesday. News that the White House put auto tariffs on hold was certainly welcomed, as was Treasury Secretary Steven Mnuchin’s statement that he expects more trade talks with China in the near future. Otherwise, we would have to wait until the G-20 meeting in late June for the two sides to get together again.

It’s really not a healthy situation to just sit around and wait for some trade headline to rescue a slipping market, but it worked today. Let’s see if we can keep this rally going tomorrow…

Today's Portfolio Highlights:

Blockchain Innovators: You may not immediately think of Starbucks (SBUX) as a good blockchain investment, but the coffee king is using the technology to “track coffee beans from farm to cup”. The company is teaming up with Microsoft to bring this technology to the Starbucks app. In addition to the blockchain exposure, Dave is also impressed that this Zacks Rank #2 (Buy) has a strong earnings trend. He thinks this could be a mainstay for the portfolio. Read the complete commentary for more and be ready for another buy before the week is out.

Home Run Investor: This portfolio has held up well even through the market’s rough patches of late. One of the newest and biggest winners is Astronics (ATRO), which is up nearly 30% since being added less than two months ago. Brian Bolan decided to add more exposure to aerospace by picking up Wesco Aircraft (WAIR), which distributes and provides supply chain management services to that industry. The company has put together a couple good reports, including a positive surprise of approximately 9.5% in its most recent from a couple weeks ago. Furthermore, earnings estimates for WAIR are moving higher, which explains its status as a Zacks Rank #2 (Buy). Read the complete commentary for more on this new buy and don’t be surprised if the editor adds another one this week.

Surprise Trader: It’s retail week as this earnings season draws to a close, so Dave added VF Corp. (VFC). This apparel company is known more by its brands, which include Vans, The North Face, Timberland, Wrangler and Lee. The name has beaten the Zacks Consensus Estimate in 8 of the last 9 quarters and has a positive Earnings ESP of 0.77% for the quarter coming before the bell next Wednesday. However, the editor is more impressed with earnings growth of 20% for next quarter. He added VFC on Wednesday with a 12.5% allocation. Read the full write-up for more.

Have a Great Evening,
Jim Giaquinto

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