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Well, we knew it wouldn't be smooth sailing forever with a wild card like Donald Trump as president. Stocks climbed 1% in his first week in the White House, but week 2 has started on a negative foot. The President's recent executive order, which temporarily blocks immigration from a handful of terror hotspots, lit an already hyperactive media on fire over the weekend and led to a sharply lower market on Monday. Along with concerns over how the order will directly impact businesses, the market was also a bit unnerved by the quick way it was brought into action. We know how the market hates uncertainty, so unpredictable moves by POTUS will have an impact.
The major indices started the day sharply lower, but recovered somewhat by the close. But they were still down by a good amount at the closing bell . The Dow is back below 20,000 with a slide of 0.61% to 19,971.1, while the S&P declined 0.60% to 2280.9. The NASDAQ dropped the most by 0.83% to 5613.7. Apart from Trump, this will be a busy week for the market in its own right with a heavy schedule of economic data, including the big jobs report on Friday. Will these reports and the continuation of earnings season be completely overshadowed by the President (who, by the way, will be announcing his candidate for the Supreme Court tomorrow)? We'll see. It'll be an interesting week.
Despite the volatility, a couple portfolios still made moves on Monday. Stocks Under $10 completed its promised trio of buys this morning by picking up a mining company that will benefit from increased industrial spending. Meanwhile, Black Box Trader replaced 7 names in this week's realignment. Read about these moves below, along with some excerpts on today's action:
Today's Portfolio Highlights:
• With industrial spending expected to spike from here, Brian added HudBay Minerals (HBM) to Stocks Under $10 on Monday. The editor is most interested in the company's mining of copper and zinc, which are building blocks for construction. HBM is a Zacks Rank #1 (Strong Buy) that beat the Zacks Consensus Estimate by 33% in its most recent report and is trading at a discount to the industry average. Brian was most impressed that shares moved higher after each of its last five reports. This pick fulfills the three planned additions that Brian promised last week, and further diversifies the portfolio from its heavy presence in chip/software and electronics names. Learn a lot more about this new addition in the complete commentary.
• It was a busy day for the Black Box Trader as the portfolio replaced seven names in this week's adjustment. Four of the sells were positive: IP (+6.9%), MGM (+2.3%), CNP (+1.1%) and C (+0.8%). It also got out of CNX, STLD and FRAN. The new additions replacing these names are Seagate Tech (STX), General Motors (GM), Hartford Financial (HIG), Lincoln Financial (LNC), Nucor Corp. (NUE), Progressive Corp. (PGR) and Unum Group (UNM). Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.
• "I will give Trump credit for actually following through on his campaign promises. The amazing thing is how many of his supporters are now questioning these ideas as they become policy. That is because the "devil is in the details" to produce policies to have the right effect. And just as important is the PR approach an administration takes in enacting these changes so people are informed of intent with the least negative impact as possible.
"It is these latter parts that are not going so well. Which is creating an uproar…which is disturbing the stock market. Again, the market hates uncertainty. Unfortunately we have a surplus of uncertainty of late.
"The longer this confusion goes on, the lower stocks will go. The sooner it gets cleared up, the sooner stocks will break to new highs above 2300," said Steve in Reitmeister Trading Alert.
• "For a second there is looked like the sky was falling. The S&P 500 futures were off from the Asian open last night and this morning was more of the same. We finally got an uptick in volatility and the Twittersphere was going absolutely bonkers. Honestly, this sort of thing is healthy. We can't be in a market that never goes down and never gets a whiff of volatility. Today though, a whiff is about all we got as the early morning butterflies settled down to afternoon jitters. The trade of the day was to fade the early volatility, keep calm and buy the dip.
"Early morning butterflies subsided but the market still finished in the red. I'm hoping the focus this week shifts to the awesome earnings reports rather than dwelling on executive orders. We are still very early on in this administration so there are bound to be a few contentious events ahead of us. I think the market will do a good job of fighting its way on through it," said Dave in Momentum Trader.
Recommendations from Zacks' Private Portfolios:
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