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S&P Hits Record Close as Tech Earnings Continue to Impress

There's no stopping Big Tech's strong quarterly results, which allowed the S&P to finish at a new closing high on Thursday after stocks drifted upward in the back half of the session.

The index rose 0.68% to 4211.47. This month has now seen the S&P’s first close above 4,000 (April 1), first close above 4100 (April 9) and now the first close above 4200 (today).

Meanwhile, the Dow advanced 0.71% (or just about 240 points) to 34,060.36 and the NASDAQ increased 0.22% (or around 31 points) to 14,082.55.

FAANG Week has been awfully strong… even if the market doesn’t always respond positively. Case in point, Apple (AAPL) couldn’t escape the post-earnings blues. The company’s first quarter report last night was stellar with earnings beating the Zacks Consensus Estimate by 40% and sales surging nearly 54%. iPhone sales jumped more than 65%!

And yet shares were down 0.07% today. Go figure!

Fortunately, Facebook (FB) went against the grain. The social media pioneer surged 7.3% on Thursday after its own epic first-quarter report yesterday that included a positive earnings surprise of 40% and revenue growth of 48%. It’s enjoying an increase in ad revenue with the economy getting back on track.

And now we’ve got e-commerce giant Amazon (AMZN) reporting after the bell today… and concluding a week of strong FAANG reports. The company beat the Zacks Consensus Estimate by nearly 62%, while revenue surged 44% to $108.5 billion. Shares of AMZN are up approximately 3.5% afterhours, as of this writing.

In other news on Thursday, jobless claims reached 553,000 last week, which was below 600K for a third straight print. Also, Q1 GDP increased 6.4%, which fell short of expectations as well but showed a strong start to the year. Both of these results suggest the economy is ready to take off as the pandemic recedes.

The major indices go into Friday’s session with slight gains for the week. The S&P is out front with an advance of about 0.7% over the four days, but the Dow is only up around 16 points. Stocks are coming off a modestly lower week that saw all the major indices snap winning streaks. However, the monthly gains heading into the final day of April are much more substantial with the S&P and NASDAQ each up by about 6%.

Friday will be the quietest day of the week for earnings, but we’ll still be hearing from ExxonMobil (XOM), Chevron (CVX), AbbVie (ABBV) and Astrazeneca (AZN), among dozens of others.

Today's Portfolio Highlights:

Insider Trader: For the first time in the history of this service, Tracey noticed some insider trading at Chipotle (CMG). A director bought 230 shares in mid-March and then another director bought 673 shares last week. With CMG trading at approximately $1500, that second purchase comes to more than a million dollars! It’s bullish to see insiders buy when the stock is trading near all-time highs. Therefore, the editor added this quick-casual Mexican food chain on Thursday with a 10% allocation. Meanwhile, a strong quarterly report is no guarantee of a rise in the stock. So Tracey decided to sell half of Avis Budget (CAR) for a more than 43% return in less than two months. Obviously, this car rental staple has been very hot of late, but it reports on Monday and the editor thinks the good news is priced in. Read the full write-up for more on today’s moves.  

Surprise Trader: The semiconductor – discretes space is in the Top 9% of the Zacks Industry Rank, so that’s a good place for today’s addition. Dave added Vishay Intertechnology (VSH), a global manufacturer and supplier of semiconductors and passive components. Over the past four quarters, the company has beaten the Zacks Consensus Estimate three times and matched once. It now has a positive Earnings ESP of 5.2% for the quarter coming before the bell on Tuesday, May 4. Rising earnings estimates have made the stock a Zacks Rank #1 (Strong Buy). The editor added VSH on Thursday with a 12.5% allocation, while also selling Landstar (LSTR) for a breakeven result. Read the full write-up for more.

Stocks Under $10: The best-performing stock among all ZU names on Thursday was Extreme Networks (EXTR), which soared 12.35% a day after reporting fiscal third-quarter results. The maker of network infrastructure equipment beat the Zacks Consensus Estimate by more than 23% yesterday, while revenues of $253.4 million topped our expectations by more than 3.5%. The top and bottom lines both improved on a year-over-year basis as well. By the way, this portfolio also had the second best performer today as MRC Global (MRC) rose 8.9%.

Income Investor: "And there was an update from the Fed on Wednesday. The central bank said that it would continue to hold interest rates near zero, but Jerome Powell commented that he's seeing some signs of 'froth' in the market.

"I think this is something many of us have noticed recently, and wondered: how much higher can this market climb?

"Just today, the S&P hit another record thanks to investor optimism surrounding the big-name earnings reports.

"We'll likely see some choppiness in the near-term, especially as the market grapples with improving economic growth and earnings growth on one hand and rising interest rates and the potential for higher taxes on the other.

"But it's still unclear if any volatility will be temporary or a more permanent fixture, which is why I'm glad at how diverse Income Investor is, since one of the simplest ways to protect your investment portfolio is diversification."
-- Maddy Johnson

All the Best,
Jim Giaquinto

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