Market Slips for Third Day While Waiting for CPI

SPECIAL ALERT: The October episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this “must-see” event when Kevin Matras, Jeremy Mullin and Sheraz Mian discuss the investment landscape from several angles.

Don’t miss your chance to hear:

▪ Sheraz and Jeremy Agree to Disagree on whether the market top is in or has further to go
▪ Kevin answers questions covering the recent pullback, and where we go from here in Zacks Mailbag
▪ Sheraz and Jeremy choose one portfolio to give feedback for improvement
▪ And much more

Simply log on to Zacks.com and view the October episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com.


The market wasn’t in the mood to do much on Tuesday ahead of an eventful session tomorrow, which will include the CPI report and the unofficial start to earnings season. And for good measure, we’ll also be getting the Fed minutes from the September policy meeting.

Given all this uncertainty (and let’s not forget a disappointing jobs report on Friday); stocks have now slipped for three straight days.

On Tuesday, the Dow was off 0.34% (or about 117 points) to 34,378.34. The S&P slipped 0.24% to 4350.65, while the NASDAQ declined 0.14% (or around 20 points) to 14,465.92.

Most of the market’s attention right now is on Wednesday’s CPI report. The economy’s main inflation indicator is expected to rise 0.3% from the previous month and over 5% year over year.

“We have a huge economic number tomorrow that could move markets in a big way. The CPI data will be out an hour before the bell and I would expect a big move if the number strays from what’s expected,” said Jeremy Mullin in Counterstrike. “If we get something over 0.5%, that will simply be bad news as it would signal the Fed needs to take action soon.”

The CPI report may be the biggest story tomorrow given how nervous investors are about inflation… but its far from the only news. In fact, a new earnings season is about to begin with reports from big banks like JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS). BlackRock (NYSE:BLK) also goes to the plate on Wednesday.

You probably remember the last Fed meeting from September as the time when Chair Jerome Powell stated that scaling back on asset purchases “may soon be warranted”. Well, tomorrow we’ll be getting the minutes from that get-together. A lot has happened since then, but investors will still be quite interested to find out what the Committee was thinking before the big jobs miss and whatever the CPI has in store for us.

Today's Portfolio Highlights:

Stocks Under $10: The portfolio is fully invested again with 15 names after today’s addition of Falcon Minerals Corp. (NASDAQ:FLMN), which will capitalize on soaring energy prices and the recent strength in oil & gas names. The company is a Zacks Rank #2 (Buy), as this year’s earnings expectations rose by a penny and next year’s advanced by three cents. The valuation may seem a bit stiff (especially 23x forward earnings), but FLMN showed topline growth of 164% in its most recent quarter and operating margins are moving in the right direction. Learn more about this new addition in the complete commentary. In other news, this service had a top performer on Tuesday as VirTra (NASDAQ:VTSI) rose 7%. The stock also cracked the top 5 over the past 30 days by climbing 28.2%.

Surprise Trader: The early days of earnings season are dominated by banks, so that’s where Dave headed for Tuesday’s addition. He likes to pick up a handful of smaller banks since they have a “good risk versus reward early on”. That’s the idea behind buying Fulton Financial (NASDAQ:FULT), which is part of the Banks – Northeast space in the top 29% of the Zacks Industry Rank. This Zacks Rank #2 (Buy) eclipsed the Zacks Consensus Estimate for two consecutive quarters, and seems on its way to another beat when it reports again on Tuesday, October 19 after the bell. FULT has a positive Earnings ESP of 4.29% for that release. Dave added the stock with a 12.5% allocation today, while also selling Levi Strauss (NYSE:LEVI) as the iconic jeans maker didn’t have much of a post earnings drift higher after its solid results. Read the full write-up for more on these moves. By the way, this service had top performer today as Covenant Logistics (CVLG) rose 4.9%.

Zacks Short Sell List: This week's adjustment included four changes to the portfolio. The stocks that were short-covered include:

• Certara (CERT)
• WillScot Mobile Mini (NASDAQ:MINI_old) (NASDAQ:WSC)
• Nike (NYSE:NKE)
• TripAdvisor (NASDAQ:TRIP)

The new buys that filled these spots were:

• AppLovin (APP)
• Enphase Energy (NASDAQ:ENPH)
• GoodRx (GDRX)
• JOYY (NASDAQ:YY)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

Until Tomorrow,
Jim Giaquinto