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Stocks Bounce Back and Snap Three-Day Skid

Investors calmed down from the recent inflation-induced frenzy on Thursday, allowing the major indices to recover a significant amount of yesterday’s selloff and snap a three-day losing streak. However, stocks are still down for the week heading into Friday.

The Dow jumped 1.29% (or about 433 points) today to 34,021.45, while the S&P rose 1.22% to 4112.50. These indices each recovered more than half of their Wednesday drops. The NASDAQ didn’t come close to halving its recent deficit, but did manage to climb 0.72% (or about 93 points) to 13,124.99.

The market had a really bad reaction to yesterday’s CPI report, which stated that consumer prices jumped well past expectations in April by soaring 4.2% year over year. Such a spike in inflation is one of the bigger concerns of investors right now, which sent each of the major indices careening lower by 2% or more on Wednesday.

They obviously simmered down today, even though the Producer Price Index jumped more than 6% last month.

How about some good economic data! Jobless claims last week hit another new pandemic low of 473,000. The result was better than expectations closer to 500K and the previous week’s 498K (or 507K after being upwardly advised). That’s a much better result than last Friday’s Government Employment Situation, which fell short of expectations by around 700K.

There were a couple big earnings reports on Wednesday, including e-commerce giant Alibaba (BABA). Sales jumped year over year, but earnings fell short of the Zacks Consensus Estimate by about 15%. That’s more than enough for this market to turn sour on a company. Shares of BABA were down nearly 6.3% in the session, but are up about 0.5% afterhours, as of this writing.

Meanwhile, Disney (DIS) reported after the bell and beat the Zacks Consensus Estimate by more than 170%. However, revenue and Disney+ subscriber counts were lighter than expected. Once again, that’s not good enough this season. Shares of DIS were up 0.3% during the session before its report, but are off more than 4% afterhours, as of this writing.

The major indices were mixed last week with the Dow and S&P both higher, while the NASDAQ was solidly lower. This time, they’re all solidly lower for the week heading into Friday. Let’s see what happens tomorrow...

Today's Portfolio Highlights:

Blockchain Innovators: The safe transport of COVID-19 vaccines is of paramount importance to the economy’s re-opening, so Dave added a stock on Thursday that’s part of this crucial pipeline. CalAmp (CAMP) is a leading provider of wireless communications products that enable anytime/anywhere access to critical information, data and entertainment content. The company has a smart tracking software solution called SC1302, which can monitor in temperatures as low as -20 degrees Celsius and link up with the company’s software. Needless to say, blockchain technology is a big help in making this happen. EPS growth for CAMP is forecasted at 70% this year and more than 35% for next, while its valuation is far below the industry average. The editor added CAMP on Thursday, while also getting out of the underperforming Rekor (REKR) and Amtech (ASYS) positions. Read the full write-up for more on today’s action.  

Counterstrike: Stocks have dipped enough that Jeremy is starting to “nibble” a bit, but he’s keeping the positions small since the market could have further to fall. On Thursday, he added a 4% position in social media pioneer Facebook (FB), which has sold off recently following a fantastic quarter with a 40% positive surprise. The editor also added a further 6% to Boyd Gaming (BYD) before its next leg higher and added 3% more to Invesco Solar ETF (TAN) as the group is “overdone”. Read the complete commentary for more on today’s moves.

Headline Trader: After the surge in yesterday’s CPI report, Dan decided to add an “inflation play” on Thursday. He picked up Teledyne Technologies (TDY), which is a high growth industrial business that's categorized under aerospace & defense. However, the editor notes that its end markets are much broader than that and include several industries at the forefront of the “4th Industrial Revolution”. The companies in these spaces rely heavily on TDY’s cutting-edge tech-driven products, so it will be able to easily pass its price increases onto these end markets with little to no margin deterioration. TDY just released a “blowout” first-quarter report and is on the verge of closing its acquisition of FLIR Systems. Dan thinks the stock is currently under-the-radar and is poised to head towards his $500 price target, which would mark a 20% upside. Read the full write-up for a lot more on TDY.   

Commodity Innovators: With the market showing strength for the first time this week, Jeremy thought this was a good time to cash in a few names that aren’t coming along for the ride. A lull in the grains bull market is taking a toll on fertilizer names, so the editor sold Mosaic (MOS) for a nice 30% return in a little over three months and Nutrien (NTR) for 8.3% in less than a month. Meanwhile, Cameco Corp. (CCJ) faltered after pushing through $20 and could be about to dip further. Jeremy sold this uranium producer on Thursday while he could still secure a 10.5% profit in just about three months. See the full write up for more.

All the Best,
Jim Giaquinto

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