Stocks Look Past Terrible Jobs Report with a Solid Week of Gains

The jobs report was as horrible and historic as we all expected, which may explain why the market was able to rally out Friday’s session and secure solid gains for the week.

There’s no way to sugarcoat it: the economy lost 20.5 million jobs last month, sending the unemployment rate to 14.7%. It was just a little over 4% before the coronavirus forced us to shutdown.

The results were actually a little better than expectations for losses of 21 million and an unemployment rate of 16%.

However, this negligible silver lining wasn’t the reason for the market’s solid performance. Instead, stocks are looking forward and hoping that we’ve seen the worst of this disruption as we slowly but surely begin to reopen the economy.

The Dow led the way on Friday with a surge of 1.91% (or about 455 points) to 24,331.32, while the S&P rose 1.69% to 2929.80.

The NASDAQ is back above 9000 after advancing 1.58% (or about 141 points) to 9121.32. But this index was the real star of the week.

Bolstered by strong performances from the FAANGs, the NASDAQ has a five-day winning streak with four sessions of 1%+ gains. It is now up more than 1.5% for 2020 and jumped 6% this week.

Meanwhile, the S&P advanced 3.5% over these past 5 days, while the Dow increased 2.5%.

The market’s performance is certainly not reflecting the country’s pain at the moment, but it has the luxury to focus on the future rather than worrying about this month’s bills.

Investors see the possibility of encouraging things on the horizon, especially parts of the country slowly opening their economies in the wake of the slowing coronavirus spread.

Even states like California are easing their rules a bit, while Apple (AAPL) just announced that it will be opening a few stores as soon as next week.

Also, a majority of the people who lost their jobs recently consider it to be temporary, according to a government survey.

Yes, there’s a lot of hope in the market right now. So much of it, in fact, that it’s making some people nervous. You can’t take care of your family on hope.

But it does feel like we’re moving in the right direction at the moment, so let’s try and stay positive as long as possible as we fight to leave the coronavirus in the dust. 

Today’s Portfolio Highlights:

Surprise Trader: Any business that offers home delivery is worth considering in this environment, whether they deliver things that go in your kitchen or things that go in your bedroom. Case in point, Purple Innovation (PRPL) sells its own unique brand of mattresses, pillows and cushions… and much of its business comes from direct-to-consumer sales online. That certainly caught Dave’s attention, but he also appreciates that this stock has a history of big beats. And now PRPL has a positive Earnings ESP of 34.62% for the quarter coming after the bell on Monday, May 11. The editor added this stock on Friday with a 12.5% allocation, while also selling the under-performing Vista Outdoor (VSTO) position. Read the complete commentary for more.

Technology Innovators: The wireless equipment names have been looking pretty good lately, so Brian decided to add InterDigital (IDCC) on Friday. This Zacks Rank #1 (Strong Buy) beat on both the top and bottom lines just yesterday. It has now topped earnings estimates for four straight quarters with an average surprise of nearly 100%. The editor thinks IDCC could be a big winner in the coming months. To make room for this new buy, he sold Viasat (VSAT) for a 19.4% return in just a little over a month. Read the complete commentary for more.

Commodity Innovators: The portfolio went searching for some good oil opportunities, but instead found ideas in natural gas. That commodity has dipped close to its 50-day MA, and now Jeremy is expecting some technical buying next week. Therefore, the editor added United States Natural Gas ETF (UNG) and VelocityShares 3X Long Natural Gas ETN (UGAZ) on Friday. The former tracks the daily changes in natural gas, while the latter trades 3X the daily move. Jeremy is waiting for a short-term bounce in prices, so don’t be surprised if UGAZ has a very quick tenure in the service. Read the full write-up for more.

Home Run Investor: Right before the market’s coronavirus crash, Health Catalyst (HCAT) reported its third straight quarterly beat. This provider of data & analytics technology to healthcare organizations will go to the plate again on May 12. It currently has a positive Earnings ESP of 7.26%, which suggests that another positive surprise is on the way. Brian likes the look of HCAT’s chart and believes it can get to $30 in the near the future. The editor bought the stock on Friday and sold the under-performing EchoStar (SATS) to make room. See the full write-up for more. This portfolio also had one of the best performers today as Plantronics (PLT) jumped 12.9%.

Zacks Top 10 Stocks: This portfolio easily had the best performing stock of the day, as Axon Enterprise (AAXN) soared 22.6% after beating on both the top and bottom lines in its recent report. By the way, seven of the ten stocks in this service are positive since being added on January 2, led by DexCom (DXCM, +84.6%), Sea Limited (SE, +55%) and DocuSign (DOCU, +54.7%).

Have a Great Weekend!
Jim Giaquinto

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