Dow Hits New High and NASDAQ Ends Skid Ahead of Jobs Report

·6 min read

The market is feeling pretty good about tomorrow’s big jobs report, as a late upswing on Thursday lifted the Dow to a second straight record close and finally ended the NASDAQ’s four-day losing streak.

And why shouldn’t the market be optimistic? We just got our second piece of solid employment data in the past two days. Jobless claims dropped to 498,000 last week, which trounced expectations of around 530K. It was also the first print below 500K in the pandemic era and the latest signal that this economy is ready to get back to business.

The report comes after yesterday’s ADP release, which stated that private payrolls added 742K in April compared to 565K in the previous month. And it’s a day before the Government Employment Situation report, which is expected to show that the economy added about 1 million jobs in April!

So why not finish Thursday with a rally?

The Dow advanced 0.93% (or about 318 points) to 34,548.53, which makes a second straight record close. The S&P rose 0.82% to 4201.62. The NASDAQ hadn’t seen the green all week, but finally snapped a four-day skid by rising 0.37% (or around 50 points) to 13,632.84.

But don’t let all this jobs stuff distract you from earnings season, which still has hundreds of reports to go. One of the big events after the bell today was mobile payment services provider Square (SQ), which beat the Zacks Consensus Estimate by more than 150% in its first quarter. Revenue of $5.06 billion also smashed our expectations. Best of all, shares of SQ are actually up 2.3% after hours, as of this writing, which has been rather rare this season.

For the 425 S&P companies that have reported already, earnings and revenue are up 47% and 10.3%, respectively. Make sure to listen to our Director of Research Sheraz Mian’s recent Earnings Outlook Podcast.

The major indices are mixed for the week heading into Friday, reflecting the different paths taken recently by the recovery names and tech. The Dow is up approximately 2% over the past four days, while the NASDAQ is down about that much. The S&P is right in the middle with a rise of around 0.5% so far.

Today's Portfolio Highlights:

Options Trader: By now, you know what Kevin loves to do whenever he doubles a premium. The editor pulls profits and repositions into new options with the original dollars committed. Therefore, he gets more time and can continue making money if it goes up, but won’t be losing any principal if it goes down. Kevin made two such moves on Thursday. First of all, he sold to close a June 230.00 Call in Snap-On (SNA) for 114.5%, and then immediately bought to open a September 260.00 Call. Secondly, he sold to close two October 140.00 Calls in Arthur J. Gallagher (AJG) for 238.3% and then bought to open two October 160.00 Calls in the same stock. See the complete commentary for more specifics on these moves.

Surprise Trader: With tech under pressure these days, Dave swapped semiconductors for steak on Thursday. The editor sold Vishay Intertechnology (VSH) on Thursday for a loss and added Ruth’s Hospitality (RUTH), the country’s largest fine dining steakhouse with over 150 Ruth’s Chris Steak House locations worldwide. It has beaten the Zacks Consensus Estimate in the past three straight quarters, and now has a positive Earnings ESP of more than 47% for the quarter coming tomorrow morning. So this is another one of Dave’s “quick turnaround ideas’. He added RUTH today with a 12% allocation. Read the full write-up for more on this new addition.

Technology Innovators: Even in the midst of a chip shortage, Power Integrations (POWI) has “somewhat stabilized” in this difficult environment and looks to be closer than most to normalizing. This Zacks Rank #1 (Strong Buy) supplies high-performance electronic components used in high-voltage power conversion systems. In other words, it’s a sub sector of the chip space. POWI has beaten the Zacks Consensus Estimate in each of the last four quarters, but what Brian really appreciates is that those surprises have been increasing. It topped by 38% last time. The editor also believes that the valuation is “reasonable” for a company that’s slated to grow 57% this year. Therefore, he added POWI on Thursday and thinks the stock could get to $95 after the next earnings report. Read the full write-up for more.

Counterstrike: After the bell today, Groupon (GRPN) will be reporting its quarterly results. Jeremy thinks the company will beat, and yet he sold the position ahead of the release for a 5.8% return in a little over a month. By now, you’ve noticed that even good earnings reports are being sold, so the editor didn't want to take a risk. However, he did start a position in Invesco Solar ETF (TAN) on Thursday with a 4% allocation. The fund has really been beaten down of late and the editor thinks it will slip into the $68-$70 area. However, if it can hold there, he’ll add more to the position in anticipation for a move higher. Read the full write-up for more specifics on these moves. In other news, this portfolio had a top performer on Thursday as Casa Systems (CASA) rose more than 4.5%.

Value Investor: This portfolio easily had the best performer of the day among all ZU names as WW (WW) soared 25.9% in the wake of its first-quarter report. The weight management services company beat the Zacks Consensus Estimate by more than 16% as its loss per share was narrower than expected. Furthermore, the company boasted 5 million subscribers to end the quarter, record digital subscribers and member retention remaining at an all-time high of more than 10 months. WW is now up nearly 60% in the portfolio since being added a little over a year ago.

Have a Great Evening,
Jim Giaquinto

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