The headline for this month's jobs report was a bit disappointing, but the market found enough good news in the body to finish this week on a high note.
The economy added 157,000 jobs last month, which fell short of expectations at about 190,000 and last month's 213,000. However, the unemployment rate moved lower and revisions of +35K in June and +24K in May were quite impressive. The report is not expected to alter the Fed's plans to hike rates a couple more times this year.
Fortunately, the market was in a glass-half-full kind of mood on Friday, as the major indices each finished the session and the week on the plus side. The Dow advanced the most despite news that China is preparing tariffs on $60 billion worth of U.S. goods; a retaliatory move to the White House's recent idea to raise tariffs to 25% on $200 billion worth of Chinese imports. The index is most susceptible to fears of a trade war, but today it found enough positives to advance 0.54% to 25,462.6. The S&P gained 0.46% to 2840.4.
The NASDAQ was most interesting to watch this week. The index was recently rocked by a couple disappointing FANG reports (especially Facebook) that had a lot of folks wondering if tech could continue to lead the market. But Apple soothed a lot of those fears by reporting a strong quarter and then becoming the first publicly-traded American company to reach $1 trillion. And the iPhone maker didn't stop today as it gained another 0.29%.
The NASDAQ spent much of the session in the red, but it eventually worked its way higher to finish with an increase of 0.12% to 7812 for its fourth day in the green. The tech-heavy index also had the best weekly performance of the Big 3 by rising practically 1%.
The S&P was up nearly 0.8% this week and the Dow was slightly higher by about 0.04%.
Today's Portfolio Highlights:
Insider Trader: It was time to cash in that nice profit in Gates Industrial Corporation (GTES) that we mentioned yesterday, especially since the stock was giving back some of that gain. On Wednesday, this application-specific fluid power and power transmission solutions company reported what Tracey called a "best-in-class" type of report, as the company's smart management team has been able to handle commodities inflation while generating really strong organic growth. She'll keep her eyes on this largely "undiscovered gem", but for today the editor sold it to secure a 15.3% profit in just about three months. The portfolio also sold its volatile Kemper (KMPR) position for a nearly 7.5% return.
Technology Innovators: After beats of more than 56% last quarter and more than 154% the quarter before, Brian Bolan is feeling pretty good about the August 8th report from Roku (ROKU). In addition, this TV streaming company has beaten on the top line in each of the three reports since going public. The editor used a little pullback on Friday to pick up ROKU, which he thinks could move past $55 if earnings beat the 15-cent loss estimate and can get closer to breakeven. The portfolio also sold semiconductor test company Cohu (COHU) for an almost 7.6% return in a little over a month. Read more about today's moves in the complete commentary.
Surprise Trader: When adding HMS Holdings (HMSY) a week ago today, Dave's hope was for another strong quarter leading to another big price surge. And that's pretty much what we got! Before the bell today, this provider of cost containment solutions for the healthcare marketplace reported a positive earnings surprise of more than 31%, while revenue also bettered the Zacks Consensus Estimate. Shares of HMSY jumped 15.6% on Friday in response to the report, giving this portfolio the top performing stock of the day for all the services.
Large-Cap Trader:"I think the biggest item to point out (in today's jobs report) were the big revisions by +60K to the previous 2 months. Add that on to the 157K for July, and you got 217K in total new additions from this report.
"All in all, the Fed is going to do 4 hikes for sure this year, unless the news we got today about the Chinese trade war actions have something to say about it. So far, the trade wars haven't been able to derail the U.S. economy, its stock market, or any consumer sentiment numbers I have seen.
"I do note a fair bit of softness in the manufacturing PMIs outside the USA, but these are still in expansion territory too.
"My thought is that trade war effects are a 2019 item, both here and abroad, not a 2018 item." -- John Blank
Have a Great Weekend,
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