Dow Closes Above 34K on Strong Retail, Jobs Data

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A couple very encouraging economic data points overshadowed earnings season on Thursday, leaving two of the major indices with new records.

Let’s start with the Dow, which jumped 0.90% (or about 305 points) to 34,035.99. Not only does this result mark its first new record since last Friday, but it’s also the first close above 34K ever. Meanwhile, the S&P rose 1.11% to 4170.42 for its second new high of the week.

The NASDAQ isn’t quite there yet, but it did finish above 14K for the first time since mid-February. It rose 1.31% (or around 180 points) to 14038.76, which is less than 0.5% from making history. The index has moved by 1% or more in each of the last three sessions.

As you’d expect, tech had a nice rebound from Wednesday’s sluggishness. Each of the FAANGs and Microsoft (MSFT) all gained by more than 1% in the session.  

We enjoyed solid reports from two of the most important parts of the economy on Thursday. First of all, retail sales in March soared 9.8%, which beat expectations of around 6% and trounced the previous month’s nearly 3% decline. Consumers are obviously spending those stimulus checks and are optimistic that the vaccine rollout is putting an end to this pandemic.

But there was more! Jobless claims came in at 576,000 last week, which was the lowest result in the covid era and an impressive improvement over expectations of around 700K. The result was also substantially better than the previous week’s 769K.

Oh and one more thing, the 10-year Treasury yield was under 1.6% today.

The data may have received most of the attention today, but earnings season continued, nonetheless. Bank of America (BAC, -2.86%) and Citigroup (C, -0.51%) were the latest big banks to report, and they easily beat earnings expectations by double digits. BAC surprised by more than 32% and C topped by over 41%.

These numbers followed impressive reports from JPMorgan (JPM, +0.63%), Wells Fargo (WFC, +0.6%) and Goldman Sachs (GS, +0.95%) yesterday.  

Meanwhile, Taiwan Semiconductor (TSM) exceeded expectations by more than 5%, but slipped over 2%. However, UnitedHealth Group (UNH) surprised by 20% AND managed to advance nearly 4% in the session.

The major indices all head into Friday with gains for the week. There’ll be more big banks going to the plate tomorrow, including Morgan Stanley (MS) and PNC Financial (PNC).

Today's Portfolio Highlights:

Surprise Trader: The early days of earnings season are dominated by banks, but you don’t hear much about a name like First Hawaiian (FHB). However, Dave likes this Zacks Rank #1 (Strong Buy) from the Banks – West space, which is in the top 7% of the Zacks Industry Rank. The company has easily beaten earnings estimates in the past two quarters by double-digit percentages, and has a positive Earnings ESP for the report coming before the bell on Friday, April 23. The editor added FHB on Thursday with a 12.5% allocation, while also selling half of Acuity Brands (AYI) for profit of 17.6% in just a little over two weeks. Read the full write-up for more on today’s moves.

Commodity Innovators: After struggling the past couple months to hold the $1700 level, gold is starting to look good again after breaking the 50-day. Jeremy wants some exposure to the gold miners so he added VanEck Vectors Gold Miners ETF (GDX) on Thursday. Meanwhile, the big rally has pretty much saved Farmland Partners (FPI), which almost got stopped out recently on its “wild ride lower”. But today the editor sold the position for a nice 18% return in a little over two months. Read the full write-up for more on today’s action.

Counterstrike: For a while now, Jeremy has been talking about the 4150-4160 area as a potential technical selling point. Well, the S&P just keeps moving higher, so the editor decided to pull some profits on a couple bigger positions today before it surpassed that level. He sold a third of The Trade Desk (TTD) for a 15.6% return in a little over a month and two-thirds of eBay (EBAY) for 8.25%. Read the full write-up for more on these moves and learn what to expect now that the S&P has passed 4160.

Options Trader: "Regarding earnings, after seeing big beats from financial giants Goldman Sachs, Wells Fargo, and JP Morgan Chase on Wednesday, we saw more positive surprises from Citigroup, US Bancorp, and Bank of America today. And for good measure, Alcoa, which has long been considered the ‘official’ start of earnings season, surprised as well with a 64.58% positive surprise.

"Earnings season is off to an auspicious start. And if the next 4-5 weeks are anything like we’ve seen so far, it could end up being nothing short of spectacular.

"We’ll get another 20 companies reporting earnings tomorrow. And then another 408 next week." -- Kevin Matras

Until Tomorrow,
Jim Giaquinto

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