Stocks closed lower on Friday as that stimulus deal continues to be as elusive as ever, but the major indices still managed gains for the full week.
Leave it to Washington to use up all the time on the clock before taking their shot. With the potential for a government shutdown just hours away, Congress is still working on an agreement.
The market believes they will eventually get it done, but all that hope from earlier in the week has turned into another layer of frustration. Many investors were thinking that the rise in coronavirus cases and the soft economic data would light a fire under the negotiations. But we’re still waiting.
In the meantime, stocks came off yesterday’s all-time highs in Friday’s session.
The NASDAQ performed best by only dipping 0.07% (or a little more than 9 points) to 12,755.64, but that snapped a four-day winning streak.
Meanwhile, the S&P’s three day run ended by slipping 0.35% to 3709.41, and the Dow was off 0.41% (or about 124 points) to 30,179.05.
All of the major indices reached new intraday highs earlier in the session before taking a header. They also had a nice, late rally that significantly limited their losses.
In the end, the NASDAQ finished the week higher by 3%, while the S&P was up 1.3%. The Dow squeaked higher with an advance of 0.4% for the five days.
It was a nice turnaround from last week’s losses, despite the expected stimulus deal not coming to fruition yet.
But there were other crazy things happening on Friday. Electric car pioneer Tesla (NASDAQ:TSLA) will be trading in the S&P come Monday in a historic rebalancing for the index. The final price for the stock at the close was an impressive $695 after gaining just under 6%.
And let’s not forget that today was quadruple witching, which added to the increase in volume as options and futures expire.
We’re coming up on Christmas week! The market will be closed on Friday and close early on Thursday. The only thing dancing through the heads of investors right now are visions of a stimulus deal. Let’s hope we get it!
Today's Portfolio Highlights:
Options Trader: The portfolio has more than doubled its premium for the two April 120.00 calls in Arthur J. Gallagher (AJG), which were added back on November 11. As Kevin likes to do in such situations, he sold to close those calls on Friday for a return of approximately 136% and then immediately bought to open two April 130.00 calls. Now he considers this to be a “free trade”, since he won’t be giving back any principal if the position declines. Of course, the editor thinks there could be further to go for this provider of insurance brokerage, consulting services, and third-party claims settlement and administration services. Read the full write-up for more on this action.
Blockchain Innovators: With a solid history of beating earnings and a growth forecast of more than 65% for this year, Dave sees a lot to like about Donnelley Financial Solutions (NYSE:DFIN). This Zacks Rank #2 (Buy) is a fintech that provides software and services for content creation, management & distribution, data analysts and multi-lingual localization services. But this portfolio is all about blockchain. So the editor is most impressed with DFIN using the technology to offer “greater ease, efficiency and security” to its clients. Read the complete commentary for more on this new buy. In other news, this service had a top performer on Friday as iClick Interactive Asia Group (ICLK) rose 6.9%.
Technology Innovators: It was an unconventional move for this portfolio to add C3.ai (AI) on Monday, since this leading enterprise AI software provider still doesn’t have a Zacks Rank. But it's paid off so far! The company was easily the best performer of the day among all ZU names by soaring nearly 17.4%, which was almost double the runner up. Furthermore, AI has now gained more than 29% since being added to the service less than a week ago. Brian was most impressed with its very successful IPO, its three straight years of double-digit growth, and its subscription-based business model.
Have a Great Weekend!
Jim Giaquinto
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