S&P Reaches Two New Records in Three Days

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The market loves it when a plan comes together, such as the Fed cutting rates for the third time this year as was widely expected by investors.

As a result, stocks rose on Wednesday, sending the S&P to another record close and bringing the other major indices well within 1% of making their own history.

Rates were lowered by 25 basis points once again, though that will probably be the last reduction in a while since the economy is doing just fine at the moment regardless of all the challenges.

And we needn’t worry about any rate hikes in the near future as inflation remains well below the 2% target.

The S&P rose 0.33% to 3046.77, marking its second closing high in the past three sessions. However, it’s about 2 points below the all-time intraday record set yesterday.

The Dow advanced 0.43% (or around 115 points) to 27,186.69, while the NASDAQ was up 0.33% (or about 27 points) to 8303.98.

The indices were each treading water before the Fed announcement. Third-quarter GDP of 1.9% beat expectations, but the data didn’t have much of an impact. 

However, Chair Jerome Powell’s mostly dovish speech certainly did as stocks jumped sharply in the final hour and finished near their highs of the day.

We got some big news after the bell as well with Apple and Facebook each reporting solid quarters with better-than-expected results on the top and bottom lines.

The reports continued what has been a very respectable earnings season amid concerns of slowing global growth and the trade conflict with China.

As of this writing, Apple is up about 1.8% afterhours while Facebook has gained more than 3%.

The market has strong gains for October heading into the final session. It'll be our second straight month in the green as we begin November, which is a historically solid time for stocks.

Today's Portfolio Highlights:

Home Run Investor: With the Fed cutting rates again, Brian wanted to add a more aggressive name on Wednesday. He picked up 8x8, Inc. (EGHT), a Zacks Rank #2 (Buy) cloud company that reported after the bell today. As of this writing, shares are up nearly 5% afterhours due to a solid fiscal second-quarter report. Total revenue jumped 27.8% year over year. The editor also sold Wabash National (WNC) today for a 3.2% advance in about two months. Learn a lot more about today’s moves and the whole portfolio in the full write-up.

Surprise Trader: Over the past 11 consecutive quarters, Tactile Systems (TCMD) has beaten the Zacks Consensus Estimate each time. And this medical technology company appears set to outperform again when it reports after the close next Monday, November 4. The stock has an impressive Earnings ESP of 44.07% for that report. Dave added TCMD on Wednesday with a 12.5% allocation. The editor also sold MarineMax (HZO) today. See the full write-up for more on today’s moves.

Large-Cap Trader: Today’s GDP report showed an economy in the midst of a “meaningful slowdown” according to John Blank, so on Wednesday he added three stocks that should do well in this environment. These new buys were:

• Mastec (MTZ) – a Zacks Rank #2 (Buy) construction services company that reports tomorrow.

• US Food (USFD) – a Zacks Rank #1 (Strong Buy) foodservice distributor that reports before the open on November 5.

• Hewlett-Packard Enterprises (HPE) -- A Zacks Rank #1 (Strong Buy) that reports on December 3.

All three of these stocks have a good history at earnings season, including positive average surprises over the past four quarters. The editor sold sidewinders Cadence Design (CDNS), Rockwell Automation (ROK) and Logitech (LOGI) to make room. Read the complete commentary for more specifics on each of today’s buys.

Counterstrike: Stocks don’t need a disastrous report to be punished. Case in point, solar company Enphase Energy plunged on Wednesday because investors wanted more. With SolarEdge (SEDG) down in sympathy and soon to report in its own right, Jeremy decided to sell the name and take a 13.7% return instead of taking a chance that its numbers won’t be good enough.

All the Best,
Jim Giaquinto

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