A potential coronavirus breakthrough led stocks sharply higher Wednesday during a busy session that also included Fed comments and earnings reports for a couple tech giants.
The treatment everyone is talking about is Gilead’s remdesivir, which seems to help accelerate the recovery time of people infected by the virus. Technically, the National Institute of Allergy & Infection Diseases stated that the drug “met the primary endpoint”.
Even Dr. Anthony Fauci, the White House’s coronavirus point man, stated that remdesivir showed a “clear-cut, significant positive effect in diminishing the time to recovery”. The FDA is even considering an emergency use authorization.
Shares of Gilead Sciences (NASDAQ:GILD) were up 5.7% today on the news. In addition to the strong results for its drug, the company must also be feeling some vindication after an article last week said it “flopped” during a Chinese study. The company stated that the findings were premature and inappropriate… and it looks like they were right.
An effective treatment means the economy could open quicker than expected, so the major indices loved the news on Wednesday.
The S&P charged right past 2900 by climbing 2.66% to 2939.51. The Dow, which saw its four-day winning streak get snapped yesterday in the final 10 minutes of the session) was back on the plus side. It jumped 2.21% (or around 532 points) to 24,633.86.
But the best performer was once again the NASDAQ, which soared 3.57% (or nearly 307 points) to 8914.71.
The index had underperformed its counterparts in the previous two sessions on nervousness about some big earnings reports. However, Alphabet (NASDAQ:GOOGL) (GOOG) jumped more than 8.7% on Wednesday as its earnings report from last night showed resilience in the face of this pandemic shutdown.
In fact, all of the FAANGs were back in the green after a couple days of losses: Facebook (NASDAQ:FB, +6.2%), Apple (NASDAQ:AAPL, +3.3%), Amazon (NASDAQ:AMZN, +2.5%) and Netflix (NASDAQ:NFLX, +2%).
The earnings train continued after the bell today with solid reports from FB and Microsoft (NASDAQ:MSFT). The social media giant is actually up about 10% afterhours, as of this writing. The software staple advanced 4.5% during the session and added more than 2% afterward.
It wasn’t all good news today, though. The first reading for Q1 GDP was much worse than expected. The economy dipped 4.8%, instead of just 4%. And we’ll continue seeing bad numbers as long as the economy remains closed.
Fortunately, the Fed is doing all it can to provide a back-up. Chair Jerome Powell stated that the Committee will keep rates low for as long as necessary. And its not afraid to help out even more in the future.
Wow…what a crazy day! And its probably not going to get much saner tomorrow. The remaining FAANGs go to the plate with Amazon and Apple reporting after the bell.
And, of course, Thursday means it’s time for jobless claims. Over 26 million people have filed over the past 5 weeks.
But tomorrow will also be the end of an amazing month that saw stocks recover about halfway from the quickest decline into a bear market in history.
Today's Portfolio Highlights:
Home Run Investor: The portfolio could use a little more tech exposure, so Brian picked up DSP Group (NASDAQ:DSPG) on Wednesday. This fabless semiconductor company has a great earnings history with four straight beats and an average surprise of 198% over that time. Earnings estimates are on hold, but that’s good enough to make DSPG a Zacks Rank #2 (Buy) in this challenging environment. The editor thinks estimates will move higher once uncertainty around this pandemic lifts. Furthermore, a “super small” short interest gives Brian even more confidence that this name is headed higher. In order to make room for DSPG in this full portfolio, Novavax (NASDAQ:NVAX) was sold and brought a gain of approximately 23%. Read the full write-up for more on today’s moves.
Surprise Trader: Last Friday, the portfolio added Curo Group (CURO) because Dave thought that the consumer lending industry would see a lot of business during this economic shutdown. Since then, the stock has soared 70%. It’s safe to say that the editor was right! And now on the eve of CURO’s earnings report, he decided to sell three-fourths of the position for a return of approximately 65%. Again, that’s in less than a week, and he still has a quarter of the position should the stock continue to advance.
The new buy on Wednesday is Vista Outdoor (NYSE:VSTO), a Zacks Rank #1 (Strong Buy) maker of optics, accessories and eyewear in the shooting sports and outdoor products segments. Recreational products are doing pretty well right now as people look for things to do while they’re stuck at home. The company topped earnings estimates by 61.5% last time and Dave thinks it will beat again when reporting before the open on Thursday, May 7. VSTO has a nice Earnings ESP of 20% and was added today with the usual 12.5% allocation. Read the full write-up for more on today’s moves.
Technology Innovators: This portfolio doesn’t usually invest in medical instrument companies, but there are a lot of weird things happening these days! On Wednesday, Brian added Quotient Ltd. (NASDAQ:QTNT), a Zacks Rank #2 (Buy) commercial-stage transfusion diagnostics company. However, the editor likes this stock's potential as a corona-testing play, since testing will be a big factor in opening this economy again. In addition, he appreciates the diversification that QTNT brings and believes it will be trading over $10 in the near term. The company has beaten earnings estimates in three of the past four quarters and had 18% topline growth in its most recent report. Read the complete commentary for more.
TAZR Trader: The "relief rally" hasn’t run its course yet, with strong Tech earnings and hopes of virus treatments extending the chase higher. But now the market is knocking on the door of SPX (NYSE:SPXC) 2950 and getting very close to what Kevin believes will be the top of its trading range heading into the worst quarters of economic contraction the US has ever seen. Therefore, Kevin added more to his index short position, the Direxion S&P 500 3X Bear ETF (SPXS), on Wednesday. Read the full write-up for specifics.
Stocks Under $10: On a strong day for the market, this portfolio had the best performing stock among all ZU names. Cornerstone Building Brands (NYSE:CNR) jumped 19.9% on Wednesday. This manufacturer of exterior building products (such as windows, vinyl siding, metal accessories, etc.) was added on April 3 and is up nearly 23% in the portfolio since that time.
Until Tomorrow,
Jim Giaquinto
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