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We got our first taste of new highs in nearly two months on Wednesday, as the strong start to earnings season keeps stocks grinding mostly higher.
The Dow didn’t join its counterparts in the week-long winning streak, but it was the first to return to new highs… at least momentarily. The index moved well past 35,631.19 at its best point today, which makes a new intraday high for the first time since mid-August.
By the close, though, the Dow’s advance was 0.43% (or about 152 points) to 35,609.34, leaving it a little more than 16 points away from a new closing high.
Speaking of the that winning streak, the S&P is still going! The index advanced 0.37% to 4536.19, stretching this impressive rally to six days and leaving it less than a point away from its own history.
However, money flowed out of tech on Wednesday, which sent the NASDAQ lower by 0.05% (or about 7 points) to 15,121.68. It was a minor slip, but unfortunately it ended the index’s five-day run.
It probably didn’t help that shares of Netflix (NFLX) dropped more than 2% in the first session after last night’s quarterly report. The streaming pioneer reported a solid quarter, including an earnings surprise of nearly 25% and better-than-expected subscriber growth of 4.4 million.
“For the 69 S&P 500 members that have reported Q3 results through Wednesday, October 20th, total earnings and revenues are up +35.3% and +12.9%, respectively from the same period last year, with 87.0% beating EPS estimates and 72.5% beating revenue estimates,” according to our Director of Research Sheraz Mian in his new article called “A Strong Earnings Picture Amid Global Headwinds”.
These strong results are helping to calm investor concerns that rising inflation and global supply chain issues would stunt corporate results and the pace of the economic recovery.
One of the bigger reports of the day came after the bell when EV trailblazer Tesla (TSLA) beat the Zacks Consensus Estimates on both the top and bottom lines. In fact, the EPS surprise was nearly 34% as the company reported record deliveries. Shares are down approximately 1% afterhours, as of this writing.
Some of tomorrow’s major reports include Intel (INTC), Danaher (DHR), AT&T (T), Union Pacific (UNP) and Snap (SNAP), among dozens of others.
Today's Portfolio Highlights:
Home Run Investor: Oil appears headed to $100 a barrel, so Brian wants each of his portfolios to have a few names from the space. This service had only one this morning, so the editor “drilled down for another play”. He picked up Ranger Oil Corp. (ROCC), a Zacks Rank #1 (Strong Buy) oil & gas company that operates primarily in the Eagle Ford Shale in South Texas and Oklahoma. The company topped the Zacks Consensus Estimate three times over the past four quarters, amassing an average surprise of 32% over that time (which includes a miss). Furthermore, ROCC’s valuation is “super low” considering topline growth of 174% in the most recent quarter and operating margins that could “easily” rise to the 32% to 35% range from its current spot at 25%. Read the full write-up for a lot more on today’s addition of ROCC.
TAZR Trader: Less than a week after buying Pinterest (PINS), shares of this social media platform spiked 12.8% on Wednesday due to rumors that Paypal (PYPL) is interested in buying it out with a $70 offer. Whether or not the deal happens, PINS was the best performer among all ZU names today. Ford (F) also made the top five with a rise of 4%. In other news, Kevin added a small, starter position in Fastly (FSLY), which plunged to earth after investors “loved it too much” last year. However, the editor decided to “nibble” on the name since that selloff seemed to be a capitulation-type move. Plus, FSLY may be partnered with Apple (AAPL) on the new iCloud+ Private Relay service. Kevin thinks the stock has “definitely” hit bottom and might add more after the Q3 report on Nov 3. Read the complete commentary for a lot more on FSLY and PINS.
Surprise Trader: The new addition to the portfolio on Wednesday is Tech Resources (TECK), a mining and mineral development company with units focused on steelmaking, coal, copper, zinc and energy. This Zack Rank #1 (Strong Buy) will be going for its sixth straight positive surprise when it reports again on Tuesday, October 26 after the bell. TECK has a positive Earnings ESP of 9.86% heading into the print. Dave added TECK today with a 12.5% allocation and also sold Heartland Express (HTLD) for 2.2% in a week. Learn more about today’s action in the full write-up. By the way, this portfolio had a top performer today as Fulton Financial (FULT) rose 6.7%.
All the Best,
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