The wind was certainly at the market’s back on Thursday as investors enjoyed good news on several fronts, including earnings reports, jobless claims and even inflation. Stocks soared well over 1.5% and are poised for a second straight week of gains.
The NASDAQ jumped 1.73% (or about 251 points) to 14,823.43, while the S&P rose 1.71% to 4438.26. Meanwhile, the Dow snapped its four-day losing streak in a big way by soaring 1.56% (or nearly 535 points) to 34,912.56.
The market doesn’t always respond positively to solid earnings reports, but today it sure did. Investors are feeling some relief at such strong results in the face of crippling global supply chain issues, rising inflation and other factors that threaten to slow the economic recovery.
But on Thursday we were all treated to double-digit earnings surprises from several of the country’s largest financial institutions, including Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Morgan Stanley (NYSE:MS), Citigroup (NYSE:C) and US Bancorp (NYSE:USB).
And there were plenty positive surprises outside of the big banks, including Taiwan Semiconductor (TSM), UnitedHealth (NYSE:UNH) and Walgreens Boots Alliance (NASDAQ:WBA), among others.
In other news on Thursday, jobless claims for last week came in at 293,000, which was much better than expectations of around 320K. It was also the first result below 300K since Covid began, which means we're back at a pandemic-era low for the first time in a month.
And we even received some decent inflation data today, as the PPI rose ‘only’ 0.5% in September. That result was better than expectations for a 0.6% advance and an improvement from August’s 0.7% increase. Of course, inflation remains abnormally high any way you look at it, as evidenced by producer prices rising 8.6% year over year.
Nevertheless, that’s two “could’ve been worse” inflation reports in as many days, which should keep investors calm while we wait for the Fed’s “transitory” prediction to come through.
So what’s in store for tomorrow? More of the same, of course! We’ll be getting a new round of earnings reports and a bit more economic data, including retail sales. The major indices are higher for the week heading into Friday, but more gains would certainly be appreciated…
Today's Portfolio Highlights:
Home Run Investor: The portfolio is a bit light these days, so Brian added for a second consecutive session on Thursday. He picked up Health Catalyst (NASDAQ:HCAT), a provider of data and analytics technology and services to healthcare organizations. This Zacks Rank #2 (Buy) topped the Zacks Consensus Estimate in each of the past four consecutive quarters, but the editor considers the most recent beat to be a “watershed moment”. HCAT broke even in that quarter, which not only beat expectations for a 13-cent loss but could also be signaling a move into profitability. If the company does get to the plus side, then Brian thinks we could see “a dramatic shift in estimates”. And with topline growth expectations of 23.5% for this year and 28.5% for next; HCAT seems ready to move into the black. Read the full write-up for more on today’s addition.
Surprise Trader: Earnings season is heating up with several of the country’s biggest banks already reporting, but Dave is leaving the big city and going out to the farm for today’s addition. The editor added Tractor Supply (NASDAQ:TSCO), the well-known retail farm and ranch store chain that has eclipsed the Zacks Consensus Estimate for six straight quarters. In fact, the last four surprises come to an average beat of 22.5%. This Zacks Rank #2 (Buy) has a positive Earnings ESP for its next report that’s scheduled for Thursday, October 21 before the bell. Dave added TSCO today with a 12.5% allocation, while also selling half of Dave & Busters (PLAY) for an 8.3% return in a little more than a month. Read the full write-up for more.
Insider Trader: "The data continues to be better than expected so that's lighting a fire under the stock market again. Remember, the market is forward looking. It has already priced in the supply chain issues.
"And yes, a lot of companies are going to talk about those issues and inflation in their earnings calls. But the Street knows this and is already thinking its transitory.
"The Street is already looking beyond the next few weeks and into next year. 2022 looks better as the supply chain issues work themselves out which should also help with some of the inflationary pressures." -- Tracey Ryniec
See You Friday,
Jim Giaquinto
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