Stocks Stage Big Rebound After Two Days of Sharp Losses

We were well on our way to a third straight session of sharp declines on Thursday, but stocks staged a dramatic rebound that ultimately led to solid performances for the major indices.

The Dow snapped its three-day losing streak by rising 1.62% (or about 377 points) to 23,625.34. It was down more than 450 points earlier. The S&P went from a 1% deficit to a 1.15% advance and ended at 2852.50.

The FAANGs were all positive for the day, but tech really didn’t lead the way higher as in recent weeks. As a result, the NASDAQ lagged its counterparts, but still rose 0.91% (or more than 80 points) to 8943.72.

By the way, it was the financials that really led this rebound, including big banks like Wells Fargo (WFC, +6.8%), JPMorgan (JPM, +4.2%), Bank of America (BAC, +4%) and Citigroup (C, +3.6%), among others.

The market is getting pretty good at overlooking rough jobs numbers. Unfortunately, it’s getting a lot of opportunities to do so, including today.

The jobless claims number for last week showed that just under 3 million people filed. That’s a little worse than expectations of around 2.7 million, and marks 36.5 million job losses in the last 8 weeks.

It seemed like stocks might be susceptible to the data this time, as the market’s mood had been growing more pessimistic lately.

Investors didn’t like yesterday’s comments from Fed Chair Jerome Powell, who said the future carries plenty of downside risks that might require more bazooka blasts from the Fed.  

The market’s rebound was impressive and a bit surprising, but we’re still heading into Friday’s session with losses of more than 2% for the week in each of the indices.

Who knows which way things will go tomorrow? But it was nice to see the bulls mount some defense after a couple days of sharp losses. Maybe they can do it again…

Today's Portfolio Highlights: 

Insider Trader: It’s certainly a bullish sign when insiders at riskier names buy shares of their companies. It’s especially bullish when they do so in this environment! On Thursday, Tracey picked up two momentum names with such activity. Virgin Galactic (SPCE) is an aerospace company that's pioneering human spaceflight, and it saw the CEO, the COO and the usually conservative VP & General Counsel all buy shares in recent days. The company has fallen sharply from early May highs, but is still up more than 38% this year. The other buy was Upwork (UPWK), a provider of online recruitment services that’s benefiting from the work-from-home trend. One director bought on May 8 and May 11. Shares have soared 85% in the last month and are now up approximately 26% this year. The editor added each name with a 10% allocation. Read the full write-up for more.

Surprise Trader: A high Earnings ESP number doesn’t guarantee the best results, but it sure is nice to see! So, it really caught Dave’s eye that Plantronics (PLT) has an ESP of 329.63% for the quarter being reported after the bell next Thursday, May 21. This Zacks Rank #2 (Buy) is a global leader in audio communications for businesses and consumers. As part of the Communication – Components space, PLT is in the top 14% of the Zacks Industry Rank. The editor added the stock on Thursday with a 12.5% allocation. Meanwhile, Purple Innovation (PRPL) got caught up in the market’s recent selloff, so Dave decided to sell the position today. Read the full write-up for more on these moves. 

Technology Innovators: The portfolio has enjoyed tremendous success from its position in ACM Research (ACMR), which soared more than 70% since its addition less than a month ago. And today, this single-wafer wet cleaning equipment company, whose products are used by chip manufacturers, was the top-performing stock of the day among all ZU names. It gained approximately 19.4%.

Have a Good Evening,
Jim Giaquinto

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