Saturday, June 3, 2023

Stocks Jump 1% to Save Week and Set New Record Highs


This holiday-shortened week ended on Friday in the same way as last week… with the major indices all at record highs! Stocks recovered from yesterday’s malaise with a 1%+ rally that turned the weekly totals positive and provided some momentum for the beginning of earnings season.

What happened to all the concerns about a stalled economic recovery, which was reported as the main reason for Thursday’s slide? It goes to show that one session’s performance doesn’t mean a whole lot for such a skittish market. You know what does carry some weight? The major indices all soaring by double-digits in the first six months of 2021.

The Dow had the best performance with a jump of 1.3% (or about 448 points) to 34,870.16, while the S&P was close behind with a 1.13% advance to 4369.55. The NASDAQ was right there too with an increase of 0.98% (or around 142 points) to 14,701.92.

Those results make record closes for each index, just like last Friday before the July 4th holiday. It also gave the indices slight gains for the four days. The S&P and NASDAQ were each up about 0.4%, while the Dow advanced 0.2%.

It’s a drop in the bucket compared to the 1%+ gains we were enjoying last Friday, but this short week really served as a buffer between the big jobs report from July 2 and the beginning of earnings season.

“Total Q2 earnings for the S&P 500 index are currently expected to be up +62.2% from the same period last year on +18.2% higher revenues. This would follow the +49.3% earnings growth on +10.3% higher revenues in 2021 Q1,” said Sheraz Mian in his just-released Earnings Preview article.

“Estimates have steadily gone up in recent months, with the current +62.2% growth rate up from +50.6% at the start of the quarter on April 1st and +41.6% at the start of January,” he continued.

As usual, the big banks kick things off with JPMorgan (NYSE:) and Goldman Sachs (NYSE:) reporting before the market opens on Tuesday. Then we’ll get Bank of America (NYSE:), Citigroup (NYSE:) and Wells Fargo (NYSE:) on Wednesday, all before the open. Morgan Stanley (NYSE:) and US Bancorp (NYSE:) go to the plate on Thursday, along with Taiwan Semiconductor (TSM) and UnitedHealth (NYSE:).

In all, there’ll be nearly 130 companies reporting next week.

Today’s Portfolio Highlights:

Blockchain Innovators: Back in 2020, Dave pulled a more than 50% return out of eGain (NASDAQ:), a leading provider of cloud-based customer engagement solutions. It was a play on the new ‘stay at home’ economy. These days, EGAN is a Zacks Rank #2 (Buy) that has beaten the Zacks Consensus Estimate in each quarter stretching back to September 2019. And growth is slated to return next year with EPS estimated to rise more than 22% on revenue improvement of nearly 12.7%. The editor wants to see if history will repeat itself, so he added EGAN again on Friday. The portfolio also sold iCAD (NASDAQ:) for a loss. Read the full write-up for more on today’s action.

Counterstrike: “And just like that we are back at highs. Impressive and steady rally after yesterdays selling, that to be honest, took me by surprise. This back and forth is really something. I was ready to get short and making my list of stocks to buy and wham, new highs.

“I talk to many traders throughout the day and a few others on a weekly basis. There seems to be a common theme that this market is very difficult. We all are struggling to make head and tales of these daily moves. It’s one of the weirdest atmospheres I’ve ever seen and very hard to be confident in a position.

“As we get earnings season going, we will be focused on the down moves to scoop. But I also want to stress that we might do things a little differently. I’m toying with the idea of more trades, with tighter stops and price targets that are achievable in a shorter amount of time. This means we are a little more active, but also with a mindset not to overtrade. I think there is a happy medium that we can achieve over these summer months.” — Jeremy Mullin

Options Trader: “It’s funny how everybody was wringing their hands on Thursday over growth concerns (for no good reason), and how everybody went from runaway inflation panic (wrong) to suddenly deflation panic (also wrong) for no reason whatsoever, other than to ‘explain’ a less than -1% move to the downside.

“That hysteria seemed to have lasted one day.

“The point is, sometimes markets go down a bit. And after such a spectacular run, a little bit of profit taking is totally normal. And that’s the takeaway. Keep your eyes on the big picture and don’t get spooked by ordinary noise, which is what Thursday’s pullback was.” — Kevin Matras

Have a Great Weekend!
Jim Giaquinto

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