Market Jumps Over 1% While Waiting for Amazon, Alphabet

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Stocks added another 1% on Tuesday as the squeeze-a-palooza continued to simmer down. Investors were also waiting for the final two FAANG reports of the earnings season.

It should come as no surprise that the NASDAQ has now recovered all of last week’s drop. The index climbed another 1.56% (or nearly 210 points) today to 13,612.78. That’s on top of Monday’s more than 2.5% advance, bringing its two-day total to more than 4%. It lost 3.6% in last week’s pullback.

Meanwhile, the Dow was up 1.57% (or around 475 points) to 30,687.48, while the S&P rose 1.39% to 3826.31. These indices still have some work to do before recovering their 3%+ losses from last week.

For the second straight session, the speculative buying seems to have calmed down. Shares of GameStop (GME), which became ground zero of the recent craziness, dropped 60% on Tuesday. That’s following yesterday’s more than 30% slide. And AMC Entertainment (AMC) plunged by more than 41%.

You can bet that we’ll see retail investors flex their muscles like this again in the future, but for now investors have relaxed after days of worrying that a pullback was on the horizon. In fact, after the past two days of rallies, stocks may be making another record-setting run soon.

Hanging over the market on Tuesday, though, was the earnings reports from Amazon (AMZN) and Alphabet (GOOG). Earnings season has been pretty solid so far. Will these big guys be able to keep the good times going after the bell?

Spoiler alert: Yep… no problem.

Each company beat on both the top and bottom lines. AMZN became the second FAANG this season to surpass $100 billion in a single quarter. (You may remember that Apple (AAPL) accomplished this feat in its report last week).

And in news that rivaled the report itself, AMZN CEO Jeff Bezos will be stepping down during the third quarter and be replaced by AWS CEO Andy Jassy. Bezos will transition to executive chairman as he focuses on “new products and early initiatives”.

Shares of AMZN are up 1.3% afterhours, as of this writing, while GOOG is up more than 7.6%.

Today's Portfolio Highlights:  

Stocks Under $10: After a challenging 2020, Brian thinks MRC Global (MRC) has stabilized and is poised to run higher again in 2021. This steel pipes & tubes maker beat the Zacks Consensus Estimate in three of the last four quarters. Furthermore, this year’s expected loss has narrowed to eight cents from eleven cents, which gives this stock a Zack Rank #2 (Buy) status. The editor added MRC on Tuesday, while also selling outsourcing play Conduent (CNDT) for 6%. In other news, shares of Cassava Sciences (SAVA) soared 141.2% today on encouraging results for its Alzheimer’s treatment. The stock was easily the best performer of the day, and is also the biggest winner over the past 30 days by jumping 654.3%! Read the complete commentary for more on all of today’s action.  

Surprise Trader: This portfolio had some success with homebuilders in previous quarters, so that’s where Dave went for today’s addition as the real estate trend continues to be hot. The editor bought Century Communities (CCS), a Zacks Rank #2 (Buy) that has beaten the Zacks Consensus Estimate for seven straight quarters. Last time, it surprised by more than 59%. Now it has a positive Earnings ESP of 2.09% for the quarter coming after the bell on Thursday, February 4. Dave added this “quick turnaround idea” on Tuesday with a 12.5% allocation, while also selling NEXTGEN (NXGN) for a small loss as the stock has done nothing positive since its quarterly report. See the full write-up for more on today’s moves.

Zacks Short Sell List: The portfolio replaced three positions in this week's adjustment. The stocks that were short-covered include:

• Aramark (ARMK, +2.2%)
• Pinduoduo (PDD, +0.6%)
• Southwest Airlines (LUV)

The new buys that replaced these names were:

• Illumina (ILMN)
• ServiceNow (NOW)
• Square (SQ)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

All the Best,
Jim Giaquinto

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