NASDAQ Jumps Over 1% as Stocks Snap Two-Day Skid

You can’t keep this optimistic market down for much longer than two days, so it’s no surprise to see stocks bounce back on Wednesday for their first positive session of the week. Each of the major indices advanced approximately 1% or more to recover over half of their recent losses.

The NASDAQ had the best performance today, just as it had the worst performances in the previous two sessions. It jumped 1.19% (or nearly 164 points) to 13,950.22. The other two major indices each rose 0.93%. The Dow is back over 34K by jumping 316 points to 34,173.31, while the S&P improved to 4173.42.

The market seemed to shrug off a 7.4% plunge in Netflix (NFLX), which disappointed investors last night by significantly missing subscriber growth expectations. The streaming pioneer added 3.98 million, while analysts were expecting more than six million. However, the first FAANG report of the season did beat on both the top and bottom lines.  

Stocks are bouncing back from two days of modest losses to begin this week, which was likely a hangover from hitting new highs last Friday on the strong start to earnings season and impressive results from retail sales and jobless claims.

So how strong has earnings season been so far? Well, the first 75 S&P 500 companies to report Q1 results averaged earnings growth of 59.2% on revenue growth of 6.1%. More than 85% beat EPS estimates, while nearly 79% topped revenue expectations. Make sure to read our Director of Research Sheraz Mian’s new article titled “A Very Strong Earnings Picture for Q1 and Beyond” for a lot more on the solid start to the season.

Some of the big reports on Thursday include Intel (INTC), AT&T (T), Danaher (DHR) and Union Pacific (UNP). We’ll also be getting a new jobless claims report tomorrow, which has big shoes to fill after a pandemic low of 576k last week.

Today's Portfolio Highlights:

Healthcare Innovators: The FDA seems poised to approve AXS-05 for the treatment of depression sometime this year, which would be a huge boon for Axsome Therapeutics (AXSM). Even a small piece of this market would be a billion-dollar opportunity for this biopharmaceutical company, and this innovative oral treatment for depression could have more than a “small” impact. In addition to AXS-05, AXSM also has other potential in its pipeline, including treatments for migraines, narcolepsy, fibromyalgia and even a smoking cessation product. Learn all about the addition of AXSM in the complete commentary. By the way, this portfolio had a fantastic session on Wednesday with three of the top five winners among all ZU names. The best performer was Oncternal Therapeutics (ONCT) with a 15.5% surge, followed by Phio Pharmaceuticals (PHIO) and Moderna (MRNA) with advances of 8.3% and 8.1%, respectively. The service also has a top performer over the past 30 days with Edwards Lifesciences (EW) rising 19.6%.

Surprise Trader: Commodity-related stocks are on the rise right now given the dollar weakness, so Dave picked up Potlatch (PCH) on Wednesday. This Zacks Rank #1 (Strong Buy) is a REIT with acres of timberland in several states. In other words, it’s part of the building products – wood space, which is in the top 2% of the Zacks Industry Rank. PCH has beaten the Zacks Consensus Estimate in eight of the last nine quarters. It has an Earnings ESP of 1.56% for the quarter coming after the bell on Monday, April 26. The editor added PCH today with a 12.3% allocation, while also selling Goldman Sachs (GS) for 1.3%. Read the full write-up for more.

Headline Trader: Shares of Home Depot (HD) are now fully priced after this home improvement giant went on a “massive run-up”. Dan thinks the stock is ready to pullback or consolidate. Therefore, he sold HD on Wednesday for 21.4% in just a little over a month. The editor also got out of NextEra Energy (NEE) today for a 5.3% return after a weaker-than-expected earnings report.

All the Best,
Jim Giaquinto

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