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Profit from the Pros By Kevin Matras Executive Vice President
Stocks End Modestly Lower After 5 Days In A Row Of Gains
Image: Bigstock
Stocks were modestly lower yesterday after 5 days in a row of gains.
The economy and earnings continue to be the key drivers.
Regarding the economy, the Redbook report showed same store retail sales up 16.0% y/y vs. last week's snapshot of 15.0%.
The Case-Shiller Home Price Index showed the 20-city adjusted gain for May at 1.8% m/m vs. views for 1.5%. The unadjusted numbers were up 2.1% m/m vs. the consensus for 1.7%. And on a y/y basis it was up 17.0% vs. views for 15.3%. On a national level they were up 16.6% and marked the second month in a row of record gains.
Not surprisingly, Consumer Confidence rose as well to 129.1 vs. last month's upwardly revised 128.9 and views for 124.9.
The Richmond Fed Manufacturing Index came in at 27 vs. last month's 26 and views for 21.
Durable Goods orders were up 'just' 0.8% m/m vs. estimates for 2.1%. Ex-Transportation, it was up 0.3% vs. 0.8%, with Core Capital Goods up 0.5% vs. expectations for a flat reading of no change.
We'll get another look at the economy today with MBA Mortgage Applications, Retail and Wholesale Inventories, and the State Street Investor Confidence Index.
We'll also get the FOMC Announcement. Rates are expected to remain unchanged, but everybody will be listening for any news on when the Fed might begin reducing their bond purchases.
In the meantime, earnings season continues to go strong. We saw another string of beats yesterday. And then after the close Apple crushed it with a 30% positive EPS surprise and an 11.35% positive sales surprise.
Microsoft did the same with a 14.21% positive EPS surprise and a 4.74% positive sales surprise.
And Google's parent company Alphabet positively surprised on both fronts as well with a 37.05% EPS surprise and a 10.58% sales surprise.
We'll get more big names reporting today with Facebook, Paypal, Pfizer, and more on deck. All in all, we'll get another 265 companies reporting today.
The economy is looking strong, even with the supply chain challenges and worker shortages in various industries. But these are transitory pressures which should soon subside.
The delta variant and its impact is also a challenge. But so far, the economy continues to rebound. And while that could create some pockets of slower growth, things overall continue to look up.
And that continues to bode well for stocks.
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
It's all over the news – there's an extreme shortage of semiconductors. As you probably expect, this situation is GREAT for chip stocks. A basket of semiconductor stocks has almost doubled the S&P's record performance over the last year.
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So what is this "better way" to play semiconductor stocks?
With the current lack of equilibrium between demand and supply likely to continue through the rest of 2021 and most of 2022, trucking stocks are a great place to put your money. Read More »
Five Zacks' experts each revealed their single favorite stock with the best chance to gain +100% and more in the months ahead. One small-cap shot up +630% in one year. With thousands of products, soaring revenue, and a booming industry, this is just the beginning.
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Here are 5 stocks added to the Zacks Rank #1 (Strong Buy) List today. Read More »
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