The news for a pre-election stimulus deal was encouraging on Tuesday… and, therefore, stocks finished higher. That’s all the reason you need for a positive session during a headline-driven market like this one.
The whole thing could be reversed tomorrow, so let’s enjoy it while we can.
Speaker Pelosi and Treasury Secretary Mnuchin are still talking up a storm. The former actually used the word “optimistic” in reference to the negotiations and downplayed the 48-hour deadline she set up that expired today.
The market probably knows that we shouldn’t be too hopeful, but it just can’t help itself.
On Tuesday, stocks recovered some of Monday’s losses. The S&P rose 0.47% to 3443.12, while the Dow was up 0.40% (or around 113 points) to 28,308.79.
The NASDAQ finally broke its five-day losing streak by advancing 0.33% (or about 37 points) to 11,516.49.
Stocks are coming back from a rough Monday session that saw each of the major indices plunge by more than 1% due to the absence of a stimulus deal.
The big earnings news on Tuesday actually came after the market closed when the first FAANG went to the plate. Unfortunately, it wasn’t that good.
Streaming pioneer Netflix (NASDAQ:NFLX) beat revenue in the third quarter, but earnings fell short. Perhaps more importantly, though, the paid subscriber additions were “only” 2.2 million. Expectations were for well over 3 million.
As of this writing, shares of NFLX are down more than 6% after hours.
In other earnings news, shares of Snap (NYSE:SNAP) are up over 22% after hours, as of this writing. Yeah, that’s not a mistake… 22%!
The mobile camera application posted a surprise profit for its third quarter and also beat on revenue. Daily active users climbed 18% to 249 million, which also was ahead of expectations.
Some of tomorrow’s reports include Tesla (NASDAQ:TSLA), Abbott Labs (NYSE:ABT), CSX Corp. (NASDAQ:CSX), Lam Research (NASDAQ:LRCX) and Biogen (NASDAQ:BIIB) just to name a few.
Today's Portfolio Highlights:
Stocks Under $10: After managing some risk yesterday by selling three names, Brian was back at it on Tuesday with a couple new buys. He added Costamare (NYSE:CMRE) and IVERIC bio (NASDAQ:ISEE), which are both Zacks Rank #2s (Buys). CMRE is a containership owner that charters its vessels to liner companies. It has beaten the Zacks Consensus Estimate in each of the last four quarters and has an average surprise of 15.8% over that time. ISEE is a biotech with a drug, Zimura, that focuses on retinal issues. It recently published Phase 3 results. Earnings estimates are “not pretty”, but that’s to be expected with a biotech. As their Zacks Ranks attest, earnings estimates are moving higher for both companies. The editor sees good things for both of these names moving forward. Read the full write-up for more specifics on these buys.
Surprise Trader: The RV has become a preferred way for folks to vacation during this pandemic, since it allows them to travel yet still practice social distancing, That’s why Dave added Winnebago Industries (NYSE:WGO) on Tuesday with a 12.5% allocation. This Zacks Rank #2 (Buy) has a positive Earnings ESP of 14.44% for the report coming before the bell TOMORROW, which makes this one of the editor’s “quick turnaround” ideas. Last time, WGO beat by more than 36%. Meanwhile, Dave decided to take most of his Sleep Number (NASDAQ:SNBR) position off the table. The stock has soared since its report less than a week ago, and he wants to bank a lion’s share of that now. Therefore, most of SNBR was sold today for a 17.8% return in a little over two weeks, but a 3.3% allocation will remain for now to let the profits run a little longer. Read the full write-up for more.
Home Run Investor: The best-performing stock among all ZU names on Tuesday was Canadian Solar (NASDAQ:CSIQ), which jumped 11.8%. Yesterday, the solar power company announced a deal to provide an energy storage system to the Mustang solar plant in California. By the way, this portfolio also had the second-best performer today as Apogee Enterprises (NASDAQ:APOG) rose 5.5%.
Zacks Short Sell List: The portfolio made three changes in this week's adjustment. The stocks that were short-covered include:
• TAL Education (TAL)
• Alcon (NYSE:ALC)
• Canada Goose (GOOS)
The new buys that replaced these names were:
• ConocoPhillips (NYSE:COP)
• StoneCo (STNE)
• Twitter (TWTR)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.
All the Best,
Jim Giaquinto
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