Vaccine Hopes Help Dow Reach Fourth Day of Gains

Stocks added onto yesterday’s gains on Wednesday, as encouraging vaccine data gave the Dow its fourth straight day in the green and helped economically-sensitive names move higher.

The market can’t get enough of positive vaccine news, so it really loved to hear that Moderna’s (MRNA, +6.9%) candidate had good Phase 1 results.

Stocks for airlines, casinos, cruise companies, hotels and the like moved higher on the news, which meant another good day for the Dow.

The index rose 0.85% (or about 227 points) today to 26,870.10. It has gained approximately 780 points in the past two days and has finished in the green every day this week, including after Monday’s epic late-day reversal.

The S&P rose 0.91% to 3226.56, while the NASDAQ advanced 0.59% (or nearly 62 points) to 10,550.49.

The latter index continues to underperform its counterparts, which still feels funny after tech led the market higher for so long despite the bump in coronavirus cases.

It’ll be interesting to see how the NASDAQ reacts when the first FAANG stock, Netflix (NFLX), reports on Thursday.

Speaking of earnings season, Goldman Sachs (GS, +1.35%) also had something to do with the session’s gains. A surge in trading revenue helped this financial giant beat expectations in today’s report.

The big banks that reported yesterday came back with solid returns for the session, including Wells Fargo (WFC, +4.54%), Citigroup (C, +3.37%) and JPMorgan (JPM, +1.55%). Only JPM rose on Tuesday.

Bank of America (BAC) and Morgan Stanley (MS) report tomorrow as the big banks kick off earnings season this week. And we’ll also be getting the jobless claims number, which continues to decline week to week but is still well over 1 million.

Today's Portfolio Highlights:

Surprise Trader: The semiconductor industry is in the top 11% of the Zacks Industry Rank, so Dave made his first chip buy of the earnings season on Wednesday by picking up MaxLinear (MXL). This Zacks Rank #2 (Buy) provides radio-frequency analog and mixed signal semiconductor SoC solutions. It hasn’t missed earnings estimates for 14 straight quarters and now has an Earnings ESP of 9.57% for the report coming after the bell on Thursday, July 23. The editor also notes that the earnings trend appears to be rounding out a bottom and creeping higher. He added MXL today with a 12.5% allocation. Read the full write-up for more.  

Home Run Investor: Shares of SailPoint Technologies (SAIL) have been on a solid run since its May report… and Brian thinks there’s plenty more where that came from. This Zacks Rank #2 (Buy) provider of enterprise identity governance solutions has beaten earnings expectations in each of the last four quarters with an average surprise of 162%. The most recent outperformance was 233%! Therefore, the editor added SAIL on Wednesday, while also taking a long-term gain by selling Inovalon Holdings (INOV) for a 36.6% return. Read the full write-up for more on today’s moves. Also, this portfolio had a top performer today as Health Catalyst (HCAT) rose 7.12%.

Counterstrike: "Positive vaccine news out last night and this morning fueled markets higher overnight and throughout the day. The idea that the virus can be vanquished, while we are left with all this easy money from the Fed, is extremely bullish.

"Markets responded to the vaccine news by chopping around right above the 3200 level and then closing strong into the end of the day. Airlines, casinos, hotels and anything relating to travel was bid higher.

"This is very positive news and the bulls will keep pushing. The question is if we can accelerate into the all-time highs in the S&P or if this news will eventually be sold. Technically, we have targets above and the path of least resistance is higher. Let’s watch out for the divergence in the Nasdaq, as a vaccine might cause some selling in tech.

"Let’s hope this vaccine momentum continues and we can get them rolling out in the fall. There will be more trials coming out and with that, alot of headlines. At some point the market will price that aspect in and we will focus on economic numbers and earnings."
-- Jeremy Mullin 

Have a Good Evening,
Jim Giaquinto

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