Tech Bounces Back to Begin Busy Week of Earnings

Tech returned from the weekend rested and ready to resume its leadership position on Monday, as the sector helped each of the major indices move higher to start a busy week of earnings reports.

It was just like the old days (i.e. a few weeks ago) with the NASDAQ easily outperforming its counterparts. The index jumped 1.67% (or about 173 points) today to 10536.27.

Last week, the NASDAQ wasn’t acting like the market trailblazer that led stocks out of the coronavirus doldrums. The once high-flying tech sector lost significant altitude on fears of being too hot. It was the only index that dropped by more than 1% over the five days.

And each of the FAANGs were down by more than 2% on Thursday, while there was only a tepid rebound on Friday.  

Well, they came roaring back on Monday with all of them up by more than 1%, led by Netflix (NFLX, +3.16%) and Apple (AAPL, +2.37%).

The market seems excited for all the tech giants reporting in the coming days. On Thursday alone, we’ll be getting the results from Amazon (AMZN), Apple and Alphabet (GOOG) after the bell.

And before that, Advanced Micro Devices (AMD), which has been taking advantage of rival Intel’s (INTC) troubles, comes to the plate after the bell tomorrow.

And, of course, there will be plenty of non-tech names reporting this week as well, as earnings season really revs up. Some of the names on the horizon include Boeing (BA), Pfizer (PFE), Exxon Mobil (XOM) and Caterpillar (CAT), among many others.

Meanwhile, the S&P rose 0.74% to 3239.41, while the Dow advanced 0.43% (or nearly 115 points) to 26,584.77.

Both of these indices snapped three-week winning streaks on Friday, though they were only down 0.3% and 0.7%, respectively, over the five days.

However, this week won’t all be about earnings. Get ready for a lot of news out of Washington, as Congress moves for another coronavirus relief plan as current benefits are days away from expiring.

Senate Republicans released their plan today, which includes reducing the $600 per week being currently offered and another round of direct payments.

Unfortunately, the only things certain in this world are death, taxes and nothing just sails through Congress. We’ll be hearing a lot about this in the coming days as the two sides debate and call each other names.

Let’s just hope they get something done quickly and without too much interruption for the people relying on those funds right now.

While we’re sending out good vibes, let’s also hope that the coronavirus cases decline and progress continues on a vaccine.

This week also includes a Fed meeting, though nothing is really expected to happen. However, it will give Chair Jerome Powell another chance to talk about the Fed doing whatever’s necessary to support the economy during this pandemic, which the market always loves to hear.

So get ready because the last week of July is going to be hectic.

Today's Portfolio Highlights:

Technology Innovators: There’s an implication in the chip space right now that Intel has dropped the ball, which means smaller names have a chance for substantial market share gains. If that’s true, then a company like MaxLinear (MXL) should be a beneficiary. The company is focused more on the communications end of the spectrum, which has been doing pretty well of late. Brian likes the earnings beat in its most recent report and the revenue guidance that was ahead of expectations. Furthermore, rising earnings estimates have made the stock a Zacks Rank #2 (Buy). The editor added MXL on Monday, while also selling the underperforming Blackbaud (BLKB). Read the full write-up for more on these moves. Meanwhile, this portfolio had one of the top performers on Monday with Tesla (TSLA, +8.65%).

Surprise Trader: Earnings season may have just started, but the transportation – truck industry has already succeeded a couple times for this portfolio.
So Dave decided to go back to that space for his first buy of the week. ArcBest (ARCB), which provides freight transportation services and solutions, has beaten earnings estimates for three straight quarters. That includes an impressive surprise of 427% in its most recent report. It currently has an Earnings ESP of 52.94% for the quarter coming before the bell on Wednesday, July 29. The editor added ARCB on Monday with a 10% allocation, while also selling Herc Holdings (HRI) for a 2.2% return in about a week. Read the full write-up for more on today’s moves.

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

• Commercial Metals (CMC, +1.9%)
• Hanesbrands (HBI, +1.1%)
• Eldorado Resorts (CZR, +0.24%)
• Robert Half Int'l (RHI)
• Nautilus Group (NLS)

The new buys that replaced these names were:

• Best Buy (BBY)
• National General Holdings (NGHC)
• Owens & Minor (OMI)
• Summit Materials (SUM)
• TRI Pointe Group (TPH)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

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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