A Second Week of Declines as September Continues

Any hopes of a positive week were dashed on Friday, as the September slump continued and left each of the major indices with slight losses over the five days. And now the market waits to hear what the Fed has to say in their meeting next week.

The S&P slipped 0.91% today to 4432.99, while the NASDAQ was off by the same percentage (or nearly 138 points) to 15,043.97. The Dow declined 0.48% (or around 166 points) to 34,584.88.

The indices actually came into Friday’s session with gains through the first four days. We enjoyed a decent rally on Wednesday (which has been rare this month) followed by only slight losses on Thursday. Even a mediocre advance could have sent investors into the weekend feeling pretty good, all things considered.

However, the above-mentioned performances left the S&P and NASDAQ in the red by 0.6% and 0.5%, respectively, for the week. The Dow was pretty much breakeven, though technically off by less than 0.1%.

That makes back-to-back weekly losses for the indices, but the declines were much narrower than last week when stocks were down by more than 1.5%.

We saw a good amount of economic data in the past few days, which continued on Friday with the University of Michigan’s consumer sentiment index. The print came to 71, which was a bit better than August’s number but below expectations of 72.

It was a similar idea to the CPI report on Tuesday and jobless claims yesterday. The results were slightly below forecasts but held up rather well, suggesting an economic recovery that’s staying on its feet though being impacted by the delta variant.

Meanwhile, the retail sales data from Thursday was downright solid by climbing 0.7% in August, compared to the market’s expectation for a 0.8% slide.

All of this stuff will be taken into account when the Fed meets next week. Investors will be watching for any announcements, or at least hints, on the central bank’s timeline for scaling back on its asset purchasing program. Has this recent data impacted their plans? We’ll find out on Wednesday.

Today's Portfolio Highlights:

Technology Innovators: There’s a lot of open spots in this portfolio right now, so Brian added for a second consecutive session today. He picked up EchoStar (SATS) on Friday, a global provider of satellite service operations, video delivery services, broadband satellite technologies and broadband internet services for home and small office customers. The company has a great earnings history with an average surprise of 187% over the past four quarters, while rising earnings estimates pushed the stock to Zacks Rank #2 (Buy) status. Brian thinks the valuation is “amazing” and really appreciates the margins moving to a gain 2.1% from a loss of 2.2% over the past several quarters. Learn more in the complete commentary.

Counterstrike: Streaming staple Roku (NASDAQ:ROKU) beat the Zacks Consensus Estimate by 270% in its most recent report from August. You’d think that would mean good things for a Zacks Rank #1 (Strong Buy), but it has actually slipped almost 25% from that release. And its now down 35% from its all-time highs. That means it’s a good candidate for this portfolio. Jeremy thinks that ROKU likely bounces back to its 200-day at around $360 - $370, which would mean a 15% to 20% gain. The editor added the stock on Friday with a small 4% position, but plans to manage this trade and possibly add more if it comes down to long-term support around $250. “Don’t be surprised if this goes against us, the key will be managing this trade,” said Jeremy. Read the full write-up for more on this move.

Value Investor: The portfolio got back into oil on Friday by adding Pioneer National Resources (PXD), as Tracey still thinks we’re entering into a multi-year bull market in energy. PXD is an industry leader in E&P and should be less volatile than smaller names. Plus, the company has one of the best balance sheets in the business. In fact, PXD’s free cash flow is so “tremendous” that it pays a variable dividend on top of its regular dividend. And, of course, it has all the good value characteristics. Meanwhile, Tracey has been patient with Fiserv (NASDAQ:FISV), but she finally got rid of it today for a slight loss after pretty much running in place since being added in February. Read the full write-up for more on these moves.

Healthcare Innovators: The top movers scoreboard was dominated by this portfolio on Friday with the top four names. Those winners were Twist Bioscience (NASDAQ:TWST, +6.9%), Pacific Biosciences (NASDAQ:PACB) of California (PACB, +6.7%), Invitae (NYSE:NVTA, +6.05%) and CRISPR Therapeutics (CRSP, +5.9%).

Headline Trader: "I suspect that the Fed will hold off on its announcement to pare its $120 billion monthly asset purchases until there are clear signs that the impacts of the Delta-dent are behind us.

"This tapering delay should catalyze another wave of risk-on capital into public equities, especially if the averages continue to slip into the meeting.

"Either way, I expect to see the market moving action next Wednesday afternoon (FOMC statement at 2:00 pm EST & Jerome Powell's post-meeting news conference at 2:30 pm)." -- Dan Laboe

Have a Great Weekend!
Jim Giaquinto

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