Stocks calmed down significantly from yesterday’s tax scare, allowing all the major indices to rally on Friday and bring their weekly losses to within 0.5%.
The market didn’t take kindly to news reports on Thursday that President Biden was thinking about doubling the capital gains tax on those making $1 million or more. Stocks had a good old-fashioned selloff of nearly 1%. However, it looks like that was just a knee-jerk reaction as investors simmered down overnight and came back with a vengeance.
The NASDAQ jumped 1.44% (or nearly 200 points) to 14016.81, while the S&P rose 1.09% to 4180.17. These gains more than made up for yesterday’s slide. The Dow lagged its counterparts but still increased 0.67% (or about 227 points) to 34,043.49.
It’s been a volatile week with the market having big shoes to fill after reaching new highs last Friday on the back of strong retail sales and jobless claims reports. And the tax stuff yesterday only made it worse. In the end, the S&P slipped 0.1% this week, while the NASDAQ was off 0.3% and the Dow dropped 0.5%.
These modest declines end weekly winning streaks for all the indices, but it was looking a lot worse this morning. They were each coming into the session with losses of well over 1%.
Now that we can put taxes behind us for now (there’ll be A LOT of debate on this issue in the weeks ahead), we can put our focus back on earnings season where it belongs. And things are going to get really interesting next week!
But first let’s recap. The season is off to a great start. With a little less than a quarter of S&P companies having reported thus far, total earnings are up nearly 47% and revenues have advanced more than 5%. For all of the info on the season so far and the season yet to come, check out Director of Research Sheraz Mian’s latest article: “Previewing Big Tech Earnings”.
As the title suggests, we’re getting ready for the FAANGs! Netflix (NASDAQ:NFLX) reported this past Tuesday, but the other four come next week. We’ll be getting Alphabet (NASDAQ:GOOGL) (GOOG) on Tuesday, Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL) on Wednesday, and Amazon (NASDAQ:AMZN) on Thursday. And just for good measure, we also have Tesla (NASDAQ:TSLA) on Monday and Microsoft (NASDAQ:MSFT) on Tuesday. All come after the bell.
There’ll also be about 800 more companies reporting next week, including 180 S&P members. So get some rest this weekend!
Today's Portfolio Highlights:
Technology Innovators: This portfolio is always on the lookout for stocks that are on the verge of profitability, and that’s what Brian sees with Upwork (NASDAQ:UPWK). This Zacks Rank #2 (Buy) is an online recruitment services company that focuses on website developers, as well as virtual assistants, marketing experts and the like. UPWK has easily beaten the Zacks Consensus Estimate in the past two quarters with positive surprises of 75% and 114% with the most recent quarter also moving to profitability. Earnings estimates for this year are still seeing a loss, but it has narrowed significantly. The most recent quarter saw topline growth of 32% on an annual basis with 25% and 22% expected for this year and next, respectively. The editor is getting into UPWK now so he can be a part of its move into the green. Learn more in the full write-up. In other news, this service had the best performer of the day among all ZU names as Clearfield (NASDAQ:CLFD) jumped 22.5%.
Surprise Trader: The final buy for the portfolio in this busy week of earnings is Polaris (NYSE:PII), which will be going for a fourth straight positive surprise before the bell on Tuesday, April 27. This Zacks Rank #2 (Buy) designs, engineers and manufactures off-road and on-road vehicles. It beat by 17% last time and has a positive Earnings ESP of 4.12% heading into next week’s report. Dave added PII on Friday with a 12.5% allocation, while also getting out of World Wrestling Entertainment (NYSE:WWE) with a slight loss to make more room for additions moving forward. See the complete commentary for more on today’s action.
Stocks Under $10: Retail is heating up right now as the economy prepares to reopen, so more inventory needs to be shipped. Rail will be a big part of this system, so Brian added Freightcar America (NASDAQ:RAIL) on Friday. This Zacks Rank #2 (Buy) manufacturer of railroad freight cars recently beat the Zacks Consensus Estimate by 36%. The expected loss for this year is moving in the right direction by narrowing to 99 cents from $1.21. But the editor was most impressed with projected topline growth of 75% for this year and 60% for next, along with an attractive valuation that leaves plenty of room to move higher. See the complete commentary for more specifics on this new pick. By the way, this portfolio had two of the best performers on Friday with GT Biopharma (GTBP, +16.2%) and Cassava Sciences (NASDAQ:SAVA, +9.7%).
Marijuana Innovators: For the first time in this portfolio’s history, Dave is buying an ETF. Usually, he doesn’t like ceding so much control to a manager, but he feels pretty confident that Amplify Seymour Cannabis ETF (CNBS) will work out fine. This fund should “allow us to participate in the price movement of some of the Canadian and OTC stocks without the messiness and uncertainty of doing the individual trades ourselves”. Make sure to read Dave’s complete commentary for all the specifics on this new buy.
Home Run Investor: When the pandemic took airplanes and hotels off the table, people turned to RVs for their vacation plans. The environment led to a great year for Camping World (CWH), a provider of services, protection plans, products and resources for recreational vehicle enthusiasts. The company eclipsed the Zacks Consensus Estimate in each of the past four quarters with an average earnings surprise of 103%. Rising earnings estimates have made CWH a Zacks Rank #1 (Strong Buy). With good topline growth and shares only around $40, Brian sees a fantastic opportunity with this name. Read the full write-up for more on this new addition.
Have a Great Weekend!
Jim Giaquinto
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