The market has now recovered all of Monday’s selloff (and then some), as stocks rose for a second consecutive session on Wednesday and are now in positive territory for the week. Meanwhile, earnings reports continue to roll in.
Remember how dire everything felt two days ago? The Dow plunged over 700 points on rising covid rates due to the Delta variant. The market acted like we were on the precipice of another shutdown, but savvy investors like our editors knew to keep their cool.
"As terrible as Monday morning was, that has all but been erased. All-time highs are teasing us all," said Dave Bartosiak in Surprise Trader. "We will see if individual stocks get resistance. I would hate to be a bear that went all-in short on Monday morning. Their covering will be what propels the market higher in the days to come."
The Dow jumped 0.83% (or about 286 points) to 34,798. That marks a two-day surge of more than 835 points, so the index has reclaimed all of Monday’s 725-point selloff and then added more than 100 points. That’s a fantastic response to the worst single-session of 2021 so far.
The NASDAQ, though, had the best performance by adding 0.92% (or around 133 points) to 14,631.95, while the S&P advanced 0.82% to 4358.69.
Shares of Netflix (NFLX) were down more than 3.2% in its first trading day following its second-quarter results last night. The streaming pioneer beat revenue and paid subscriber growth expectations, but earnings missed and the outlook for Q3 was on the soft side.
NFLX was the first FAANG to report. The rest of them come next week.
The vast major of reports so far have beaten expectations. One of the big outperformances today came from Johnson & Johnson (JNJ), the diversified healthcare giant that released a single-doze covid vaccine. The company’s second-quarter earnings beat the Zacks Consensus Estimate by more than 8% while sales of $23.3 billion also topped our expectation. Shares of JNJ were up 0.62% today.
On Thursday, we’ll be getting reports from Intel (INTC), Abbott Labs (ABT), Danaher (DHR), Snap (SNAP) and dozens of others. Jobless claims will also be released tomorrow after reaching a new pandemic low of 360K last week.
Today's Portfolio Highlights:
Surprise Trader: Of all the regions to have some banking exposure, Dave is most interested in the Southeast. People are moving in droves to places like Florida, just like the editor did himself a few years back. So he has first-hand knowledge of the potential down there, which is why he added Trustmark (TRMK) on Wednesday. This Zacks Rank #2 (Buy) is part of the Banks – Southeast space, which is in the top 23% of the Zacks Industry Rank. The company topped expectations for four straight quarters now and has a positive Earnings ESP of 9.2% for its next report after the bell on Tuesday, January 27. Dave added TRMK today with a 12.5% allocation, while also selling Controladora Vuela (VLRS) for a slight loss. The complete commentary has more on today’s moves. By the way, Dillard's (DDS) was one of the top performers among all ZU names today with a rise of 7.3%.
TAZR Trader: You can’t say that Ford (F) is ‘set in its ways’. The automaker refuses to let Tesla (TSLA) have all the fun in the electric vehicle space, which is why its pushing the F-150 Lightning EV truck. If the company can get truck owners to invest in an EV instead of the traditional gas guzzler, then it will open up a whole new market that could really challenge TSLA in the commercial truck market. F also formed a partnership to introduce self-driving vehicles on Lyft (LYFT)! Kevin decided to buy F on Wednesday, as sales are expected to grow 20% to $152 billion next year. Plus, it’s a better valuation than the “bloated” TSLA. The editor added to his Baidu (BIDU) position, as well, because this Chinese autonomous driving and AI company is less threatening to the CCP. He also thinks “the risk of US delisting is overblown”. Read the full write-up for more.
Commodity Innovators: Shares of APA Corp. (APA) pulled back 30% from its 2021 highs, but the rally in crude generated an aggressive bounce. Jeremy decided this was a good time to buy this Zacks Rank #1 (Strong Buy) independent energy company, which is engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. He sees APA as a mid-term holding. The editor also sold IPath Series B Bloomberg Livestock Subindex Total Return ETN (COW) and IPath Series B Bloomberg Cotton Subindex Total Return ETN (BAL) for a slight profit and slight loss, respectively, over the past four months. Read the full write-up for more on today’s action.
Stocks Under $10: Later this month, Cassava Sciences (SAVA) is scheduled to provide an update on its lead candidate at the Alzheimer's Association International Conference. Brian thinks this progress report could "drive the stock well into the triple digits". But its not just waiting around. Shares of SAVA soared just under 30% on Wednesday to easily become the best performer among all ZU names. It's now among the biggest gainers over the past month with a rise of 31.1%. Most impressively though, SAVA has soared 1500% in the portfolio since being added less than seven months ago.
All the Best,
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