Still Setting Records Ahead of Big Tech Earnings

·6 min read

Here we go! Perhaps the most important week of earnings season began today with stocks still making gains and setting records. Now we prepare for reports from the biggest tech names on the planet while looking to close out a very strong October.

The S&P rose 0.47% today to 4566.48, while the Dow advanced 0.18% (or about 64 points) to 35,741.15. Both of these indices set new record highs. The S&P has now made history in two of the last three days, while the Dow has done so in the last two sessions consecutively.

The NASDAQ may not be blazing new trails right now, but it did have the best performance on Monday by rising 0.90% (or about 136 points) to 15,226.71. In addition to excitement over the onslaught of tech giants reporting in the next few days, this index got a lot of help today from Tesla (TSLA).

The EV giant got an order for 100,000 vehicles from car rental staple Hertz (HTZ), which reflects the record deliveries highlighted in its solid quarterly report from last week. That’s the same report that beat the Zacks Consensus Estimate by nearly 34%.

Oh and one more thing, TSLA is now the latest company to reach a $1 Trillion market cap, which couldn’t be more apropos since the rest of the super elite $1 Trillion club will be reporting this week.

The first of those behemoths to go to the plate was Facebook (FB) after the bell today. Shares of the social media giant are up nearly 2% afterhours, as of this writing, despite a mixed third quarter report. The company slightly beat the Zacks Consensus Estimate, but revenues were a bit light. Furthermore, its fourth-quarter guidance was on the soft side, though active users were up and its share buyback was increased.

The noteworthy reports for tomorrow include Microsoft (MSFT) and Alphabet (GOOG), which are both trillion-dollar companies as well. Remember what Director of Research Sheraz Mian said last Friday in his Previewing Big Tech Earnings report: FB, MSFT and GOOG, along with Apple (AAPL) and Amazon (AMZN), account for nearly 23% of the total market cap of the S&P 500 index.

By the end of this week, we’ll have reports from all of them!

As for last week, stocks are returning from a fantastic performance that saw each major index rise by 1% or more. (The S&P was up 1.6%.) And now we’re set up for a really strong October… but there are still four days to go and plenty of potentially market-moving news to be released.

Today's Portfolio Highlights:

Surprise Trader: This portfolio kicked off a busy week of earnings by cashing in a double-digit winner. Dave sold half of Olin (OLN) for more than 17% in just a little over a week. The editor will let the rest run to see how much higher it can go. The new buy is a “quick turnaround idea” as Canon (CAJ) is scheduled to report before the bell tomorrow. This Zacks Rank #1 (Strong Buy) is a leader in professional and consumer imaging equipment and information systems, which puts it in the highly-ranked Office Automation and Equipment space (Top 16% of the Zacks Industry Rank). CAJ beat by 76% last quarter and has a positive Earning ESP of 6% for the upcoming release. The stock was added on Monday with a 10% allocation. See the full write-up for more specifics on all of today’s action. In other news, this service had a couple top performers today with Nucor (NUE, +6.9%) and Perion Network (PERI, +6.2%).

Counterstrike: When luxury furniture retailer RH (RH) was added last week, Jeremy picked it up with a smaller 6% allocation with plans to add more on a move lower. That opportunity came today as the editor “likes this spot above $650”. He doubled down on RH on Monday with another 6% allocation. The service also sold F5 Networks (FFIV) on the eve of its earnings for a 2% profit in a little over two months. The company will likely beat, but Jeremy isn’t sure that its price will follow higher. The complete commentary has more on today’s moves.

TAZR Trader: The plan was always to buy more Pinterest (PINS) on a pullback, since Kevin is a big believer in this unique social media platform that’s transitioning into a full-fledged e-commerce site. Well, we certainly got a pullback on Monday, as shares plunged double digits on news that PayPal (PYPL) WON’T be buying PINS after all. As far as the editor is concerned, their loss is this portfolio’s gain! Whether there’s an acquisition or not, the $70 price tag for PINS alerted the market how much the company might be worth. So Kevin added more today with plans to go to the bank down the road. Read the full write-up for more.

Technology Innovators: Ever since Tesla (TSLA) reported strong quarterly results last Wednesday, shares of this EV pioneer have been on the rise. That was especially true on Monday when the stock soared nearly 12.7%, giving this portfolio the best performer among all ZU names by a wide margin. Investors really appreciated news that car rental staple Hertz (HTZ) ordered 100,000 TSLA vehicles to be delivered by the end of next year, providing yet another sign of the growing popularity of EVs. And this news comes less than a week after TSLA beat the Zacks Consensus Estimate by more than 30% and announced record deliveries. TSLA is this portfolio's best performer by climbing 1120% since being added in March 2020!

Black Box Trader: Half of the portfolio was replaced in this week's adjustment. The stocks that were sold included:

• Steel Dynamics (STLD, +9.5%)
• Stellantis N.V. (STLA, +3.8%)
• Huntsman Corp. (HUN, +2.7%)
• Century Aluminum Co. (CENX)
• Nucor Corp. (NUE)

The new buys that filled these spots were:

• Athene Holding Ltd. (ATH)
• AutoNation (AN)
• HollyFrontier (HFC)
• Jefferies Financial (JEF)
• Valero Energy (VLO)

Read the Black Box Trader’s Guide to learn more about this computer-driven service.

Have a Good One,
Jim Giaquinto

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