New Highs for S&P, Dow on Strong Jobs Report

Validea Peter Lynch Strategy Daily Upgrade Report - 12/9/2017

With a government shutdown averted (for now), the big story on Friday was the Government Employment Situation report…and it didn’t disappoint. The economy added 228,000 jobs in November, which surged past expectations and salvaged weekly gains for two of the major indices.

The S&P had another positive session with a rise of 0.55% to 2651.5, marking a weekly advance of more than 0.3%. The Dow was up 0.49% to 24,329.2, finishing with an increase of 0.4% for the week. Both of these indices are back at all all-time highs and just completed their third straight week of gains.

Then there’s the NASDAQ. The index recovered nicely from slumps on Monday and Tuesday, and finished today’s session with a jump of 0.40% to 6840.1. However, the runup in the past few days came just short of rescuing the week as the index ended with a slight decline of 0.1%.

In the portfolios, Surprise Trader found a company that still hasn’t reported earnings, and it was good enough to be bought. Also, Healthcare Innovators added a pharmaceutical giant that should provide some stability for the portfolio’s biotech names. Learn more about these moves in the highlights section below:

Today’s Portfolio Highlights:

Surprise Trader: Earnings season may be mostly over, but there are still some companies left to report. Therefore, there’s still some buys that the portfolio can make. Today, Dave bought a 12.5% allocation in Paychex (PAYX), which will report before the bell on December 21. This Zacks Rank #2 (Buy) provides payroll, human resource and employee benefit outsourcing solutions. The company hasn’t missed an earnings report in the last 20 quarters, and the editor believes that impressive streak will continue. Learn more about this new addition in the complete commentary.

Healthcare Innovators: The portfolio is always on the lookout for some “ballast” to support its riskier biotech wing…and there’s no better company in the healthcare space than the proven pharmaceutical giant Merck (MRK). Of all its products, Kevin is most excited by its immune-oncology drug Keytruda. Delays over its launch pulled shares down by 10% in October, but the editor feels that MRK will make the right acquisition(s) to eventually turn this drug into its next blockbuster. It recently got some support in that regard when a major brokerage initiated coverage with a Buy rating and a price target that suggests 15% upside. Read the full write-up for a lot more on this new addition. 

Options Trader: “Great day in the markets today after another great employment report. And the Dow and the S&P both finished up for the week again, making new all-time high closes in the process.

“Today’s Employment Situation Report came in better than expected with a headline number of 228,000 new jobs being created last month. That was well above the consensus for 190,000. (Private payrolls were up 221,000 vs. views for 184,000, while public payrolls were up 7,000 vs. expectations for 6,000.)

“All in all, it was another fantastic employment report. And the markets rallied accordingly.

“There’s literally only three more trading weeks left in the year.

“If things ended today, we’d have another banner year. But I think these next few weeks have even more gains in store, as December usually does.” — Kevin Matras

Have a Great Weekend,
Jim Giaquinto

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