It was another volatile day on Wall Street.
The quickly spreading delta variant of COVID-19 continued to spook investors, and Thursday’s unemployment claims data – which showed first-time applicants fell by 29,000 last week to a pandemic-low 348,000 filings – only underscored signs of a tightening pool of available workers.
"The labor market is the Fed's primary target with its stimulus programs," says Andy Kapyrin, partner and co-head of Investments at wealth management firm RegentAtlantic. "It wants to see very significant progress towards full employment before it backs off."
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Although the major indexes traded on either side of breakeven all day, bargain-hunters helped pull the S&P 500 Index (+0.1% at 4,405) and Nasdaq Composite (+0.1% at 14,541) to a higher close.
The Dow Jones Industrial Average, however, wasn't so resilient, slipping 0.2% to 34,894, as oil major Chevron (CVX, -2.5%) plunged on a sixth straight drop for U.S. crude futures (-2.7% to $63.69 per barrel) – the longest such streak since February 2020. The industrial average has now closed lower for three consecutive sessions.
Other news in the stock market today:
- The small-cap Russell 2000 gave back 1.2% to 2,132.
- Chip giant Nvidia (NVDA, +4.0%) gained ground on the back of a strong second quarter. Revenues of $6.51 billion and earnings of $1.04 per share both beat analysts' expectations, and current-quarter sales forecasts of $6.8 billion also beat the Street's estimates. "Headline results + guidance were solid yet again and met elevated investor expectations, particularly with respect to implied guidance for data center," say UBS analysts Timothy Arcuri and Pradeep Ramani, who rate the stock at Buy. "Gaming is trending more in-line into the seasonally strong Oct Q, ProVis has stepped up as Ampere starts to penetrate these high-end workstations, and data center is so strong that it is more than offsetting a decline in the crypto-specific CMP SKU."
- Also rising Thursday was Cisco Systems (CSCO, +3.8%), which also beat the pros' expectations on the top and bottom lines. Revenues of $13.1 billion were up 8% year-over-year to close out the company's fiscal fourth quarter. Better still, the networking hardware firm believes it will grow sales by 7.5% to 9.5%, beating Street expectations, though the midpoint of its earnings guidance (80 cents per share) came in slightly under analysts' views (81 cents).
- Gold futures slipped 0.1% to $1,782.30.
- The CBOE Volatility Index (VIX) rose 0.5% to 21.67.
- Bitcoin prices jumped 3.9% to $46,690.83. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
Build Up That Defense
Is it time to go to cash?
Not necessarily, says Phil Toews, CEO of advisory firm Toews Corporation. "In the current market environment, investors should be focused on riding the 'crash up' while still maintaining a more defensive position in their portfolio."
To do so, he recommends low-volatility stocks, which tend to be more value-oriented. "Their positioning is defensive, with reasonable valuations, historically reduced max drawdowns during bear markets, and stronger cumulative returns during bear-market decline and recovery."
Investors looking to bolster the defensive part of their portfolios may want to consider yield-friendly names from the utilities or consumer staples sectors.
There's also plenty of generous dividend payers – and lower volatility options – to be found among real estate investment trusts (REITs). And if you're looking for easy diversification in your defensive plays, consider these seven REIT ETFs. They represent numerous industries and investment approaches, all with attractive yields to boot.
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