Now we’ve got a real streak in the market! The Dow and S&P just completed a third consecutive session of sharp gains as a humongous stimulus package seemingly nears completion in Congress.
The Dow is back above 22K after soaring 6.38% (or 1351.62 points) on Thursday to 22,552.17. Over the past three days, the index has jumped nearly 4,000 points, or more than 21%.
Now that’s a nice bounce. And the other two major indices have come along for the ride.
The S&P rose 6.24% to 2630.07 and the NASDAQ improved 5.6% (or about 413 points) to 7797.54. These indices are up more than 17% and 13%, respectively, in the past three days.
And the stimulus package STILL hasn’t passed! Although, it probably will tomorrow. The approximately $2 Trillion relief plan made it through the Senate late last night despite some last minute whining from Senator Sanders and a few Republicans.
It will be taken up by the House on Friday when it is expecting to pass with resounding bipartisan support.
There are a lot of measures in the bill, but the bottom line is to get money to people and organizations that really need it in an economy that has largely shut down in the past few weeks.
This upward momentum completely overshadowed a truly startling initial jobless claims number. According to the Labor Department, there were nearly 3.3 million claims last week, which was an all-time record and well above the consensus.
However, the market shook the report off on Thursday. We knew it would be bad. Just like we know coronavirus cases will go up in the U.S. as more people get tested.
The important thing is that we’re finally getting some data on this stuff. As has always been the case, the market hates uncertainty… and that’s all its been getting lately both with the virus and its impact on the economy.
There’s going to be some scary numbers released in the coming weeks, which is one reason why investors are skeptical of this bounce back and are unwilling to believe we’ve reached a bottom.
But there’s nothing scarier than not knowing!
Today's Portfolio Highlights:
Home Run Investor: Shares of SP Plus (SP) plunged to around $22 from $45 in mid-February because there’s not much need for parking services or other event logistics when the country is locked down. However, this is one of those companies that should take off when things get back to normal down the road, which is just the kind of additions that Brian is looking for right now. SP is a Zacks Rank #2 (Buy) that has beaten the Zacks Consensus Estimate in three of the last four quarters with an average surprise of 11% in that time. It’s starting to come back just a little, so Brian added it on Thursday with hopes of a bigger bounce back moving forward. Read the full write-up for more on this addition.
Insider Trader: Most companies don’t have any idea what’s going to happen with earnings and revenue in this environment. Given all this uncertainty in the atmosphere, Tracey thinks we’re going to see some “extraordinary swings” in the market for a while longer. Therefore, the editor used this amazing rally over the past three days to bank some profits. On Thursday, she sold all of Eli Lilly (NYSE:LLY) for a 19.4% return and half of the following positions:
• United Rentals (URI, +37.4%)
• Aimmune Therapeutics (AIMT, +23.2%)
• Cloudera (CLDR, +17.3%)
• Newell Brands (NWL, 12.8%)
See the full write-up for a lot more on today’s moves.
Stocks Under $10: Streamers are doing better than most during this coronavirus catastrophe. And on Thursday, Brian added one that’s focused on fitness, which is also a sweet spot in this environment since most gyms are closed and people need some exercise. The new buy is Gaia (GAIA), a Zacks Rank #1 (Strong Buy) that already seems to be in recovery mode. It has beaten the Zacks Consensus Estimate for the past four quarters with an average earnings surprise of 20% and looks to be on the road to profitability. Get more specifics on this latest addition in the full write-up. This portfolio also had one of the best performers of the day among all ZU names as recent addition Avid Technology (AVID) jumped 17.5%.
Large-Cap Trader: With the market showing some signs of life this week, John decided it was time to make good on a few ideas he’s been considering for a while now. The editor sold half of Alibaba (NYSE:BABA) for a nice 16.7% return and dumped all of Mellanox Technologies (MLNX). He took the BABA money and put a 5% stake into Western Digital (NASDAQ:WDC), a Zacks Rank #2 (Buy) memory space giant with a new CEO and no direct exposure to the coronavirus. But that’s not all!
The portfolio also used the proceeds at put 3% more into the following three existing positions:
• US Foods (USFD)
• MasTec (MTZ)
• Arconic (ARNC)
These are all more risky, high beta names that John plans to “ride back up” after getting shellacked in the coronavirus correction. Read the full write-up for more on all of today’s moves.
Technology Innovators: Colleges and other schools are moving to an online offering amid this coronavirus shutdown, which falls right into the wheelhouse of 2U (TWOU). This Zacks Rank #2 (Buy) provides cloud-based software-as-a-service solutions that allows nonprofit colleges and universities to deliver their education to students anywhere. The stock is up big already, but has a long way to go to get back to its highs. Brian added TWOU on Thursday and plans to go along for the ride. Read the full write-up for more on this new addition.
Until Tomorrow,
Jim Giaquinto
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