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Stocks Surged by Double Digits in April

The market took a step back on Thursday amid another alarming jobless claims report, but it didn’t make much of a dent in a broadly positive month that recovered a significant amount of the coronavirus selloff.

The NASDAQ soared 15.5% in April on the back of a robust tech sector, while the S&P jumped 12.7%. These indices more than offset last month’s declines of 10% and 12.5%, respectively.

The Dow jumped a little over 11% in the past 30 days, though it couldn’t get back all of March’s 13.7% plunge.

Though there are countless challenges to come, it’s good to take a moment and appreciate just how far we’ve come in April.

When this month began, the market was reeling from the quickest decline into a bear market in history. The indices suffered through four “circuit-breakers” and three single-day plunges of more than 2000 points each in the Dow.

Since then, we’ve seen big moves from the Fed and Congress, progress on medical treatments from drug companies, and – perhaps most importantly for the country’s nerves – a slowdown in the coronavirus spread that suggests all this social distancing has been worth it.

Now we enter May actually talking about slowly reopening this economy!

The sooner it’s safe to open up, the better… because we got another bad jobs report this Thursday. Last week, a little more than 3.8 million people filed jobless claims, which was again worse than expected and brought the six-week total to more than 30 million.

Also, consumer spending dropped dramatically in March by 7.5%.

The NASDAQ had the best performance, again, on Thursday by dipping only 0.28% (or around 25 points) to 8889.55, while the S&P slipped 0.92% to 2912.43. The Dow dropped 1.17% (or about 288 points) to 24,345.72. The indices each came off their lows by the close.

Stocks certainly reacted to the latest round of poor jobless claims numbers, but they’re also bumping up against resistance after the huge runup this month. Let’s hope there’s more good news in May to spark the next uptrend.

The FAANGs had another good session after slipping on Monday and Tuesday ahead of the tech report deluge. Each of them advanced on Thursday: Facebook (FB, +5.4%), Amazon (AMZN, +4.3%), Apple (AAPL, +2.1%), Netflix (NFLX, +1.9%) and Alphabet (GOOG, +0.5%).

The final two FAANGs reported after the bell today as this busy tech week comes to a close. AMZN and AAPL are down 5.4% and 1.6%, respectively, after hours as of this writing.

We’ll see how these reports impact Friday’s session. AMZN beat on revenues but missed EPS, while Apple topped on both lines.

Too bad April has to end. It felt like the market got a little confidence back. Let’s keep it going in May!

Today's Portfolio Highlights: 

Stocks Under $10: The portfolio succeeded in its goal of getting to a full 15 names by May 1. On Thursday, Brian added AXT Inc. (AXTI), a company that makes high-performance compound semiconductor substrates. Chip names have seen a lot of strong results lately… and this one in no exception. Most recently, it reported a penny loss, but that was 80% better than the Zacks Consensus Estimate at a four-cent loss. That makes three beats in the last four quarters with an average surprise of 35%. And rising earnings estimates have made AXTI a Zacks Rank #1 (Strong Buy). Read the full write-up for more on this new addition.

Commodity Innovators: The portfolio did a little tidying up on the last day of April by selling a couple of positions for huge moves in both directions. The iShares Global Timber & Forestry ETF (WOOD) has been a solid position for Jeremy since being added back on March 12. He decided to take the 19.5% return on Thursday and will consider getting back in at a lower entry point. However, the sale of IPath Series B Bloomberg Livestock Subindex Total Return ETN (COW) brought in an equally sharp loss, but the editor still likes the name and will look for a better bargain down the road.

Surprise Trader: The portfolio hadn’t bought anything from the highly-ranked Medical-Drugs industry (Top 4%) during this earnings season, so Dave remedied that today with a 12.5% allocation in Radius Health (RDUS). This Zacks Rank #2 (Buy) is a biopharma company focused on endocrine therapies in osteoporosis and oncology. The stock beat earnings by more than 27% in its most recent quarter. And now RDUS has an Earnings ESP of 1.7% for the next report Thursday, May 7 after the bell. The editor also sold the underperforming Ardagh (ARD) to make room for a new addition. See the complete commentary for more. 

Technology Innovators: This portfolio is already thinking about an open economy. Once the lockdown lifts, Brian believes that a company like GreenSky (GSKY) will be seeing a lot more transactions. This Zacks Rank #2 (Buy) offers a proprietary technology infrastructure platform that supports the full transaction lifecycle, including credit application, underwriting and real-time allocation. GSKY has about 17K merchants that use its platform and they can’t wait to get back to business. The editor likes that this stock hasn’t really recovered from the crash yet, because its got a lot of room to run. Read the full write-up for more on this new addition.

Until Tomorrow,
Jim Giaquinto

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