Stocks Jump More Than 1% on Revived Stimulus Hopes

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On the other hand… maybe some kind of stimulus measures before the election IS possible. And as a result of that revelation, stocks recovered all of yesterday’s losses and then some in Wednesday’s session.

President Trump was at the heart of the market yet again today. This time, he tweeted out support for $25 billion to the struggling airlines, $135 billion for the Paycheck Protection Program and a round $1200 stimulus checks.

This comes just a day after calling off talks for a big relief package that was being negotiated between Speaker Pelosi and Treasury Secretary Mnuchin.

So a major, trillion-dollar deal may not be in the cards before the election, but perhaps smaller, more targeted aid can happen.

The market will take anything it can get at this moment, which is why the major indices took off on Wednesday in a broad-based rally.

The Dow surged 1.91% (or around 530 points) to 28,303.46, while the NASDAQ jumped 1.88% (or 210 points exactly) to 11,364.60. The S&P rose 1.74% to 3419.44.

Of course, the airlines loved the news with American Airlines (AAL) and United Airlines (UAL) both up more than 4%. Other recovery names did well too, including cruise stocks like Carnival (CCL, +5.27%) and Royal Caribbean (RCL, +2.78%).

The FAANGs mostly participated in the upward momentum as well, especially Netflix (NFLX, +5.69%) and Amazon (AMZN, +3.09%). Apple (AAPL) contributed with a 1.7% advance.

What a strange 24 hours! The market’s reaction these two days show just how much it wants some sort of stimulus, which was underscored yet again by Fed Chair Powell yesterday.

A vaccine is the ultimate goal of course, but no one knows when that will happen even with accelerated timetables. But a stimulus package seems much more doable if it weren’t for the election that’s now less than a month away.

Let’s see what happens and hope for the best…

Today's Portfolio Highlights:

Surprise Trader: We’re still spending a lot of time at home as this stubborn pandemic just keeps lingering. Dave thinks the HVAC space will benefit, especially as the country prepares for winter. On Wednesday, he picked up Watsco (WSO), a Zacks Rank #2 (Buy) with a positive Earnings ESP for its upcoming quarterly report. The official date hasn’t been set, but WSO usually reports during the second or third week of October… so it’s right around the corner! It beat by more than 18% last time. The editor added WSO with a 12.5% allocation. The portfolio also sold half of eGain (EGAN), which brings a return of approximately 31% in less than 6 weeks while letting the other half continue to run. Read the full write-up for more on today’s moves.  

Home Run Investor: The portfolio shifted gears a bit on Wednesday by selling a couple tech names and adding a professional services firm. Firstly, Brian got out of Zscaler (ZS) for a return of about 138% in a little over six months. This was the service’s top position, but it slipped to a Zacks Rank #5 (Strong Sell). He also got out of Model N (MODN) for a more than 31% profit in less than 5 months. The new addition is Genpact (G), which manages business processes for companies around the world. This Zacks Rank #2 (Buy) has beaten the Zacks Consensus Estimate in each of the last four quarters, but the editor was most impressed that the surprises have been getting bigger. The most recent beat was 48%. He also likes the valuation. Make sure to read the complete commentary for more on this new buy and all of the day’s moves.

Healthcare Innovators: The Nobel Prize for chemistry was just awarded to a couple founders of the CRISPR technology. Kevin has known about the game-changing possibilities of this gene therapy for years now, which is why he constantly adds such companies to this portfolio. One of them is Intellia Therapeutics (NTLA), which jumped nearly 13.2% on Wednesday to become the best performer among all ZU services. This stock is also the biggest winner in the portfolio with a gain of more than 77% since being added last November. By the way, this portfolio had TWO big gainers today as Quidel Corp. (QDEL) jumped 11.1%.

Until Tomorrow,
Jim Giaquinto

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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