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S&P Knocking on the Door of 3,000

Jim Giaquinto

The first week of earnings season is looking pretty good for the major indices, as they managed green closes on Thursday and are poised for another week of gains heading into Friday.

The NASDAQ advanced 0.40% (or around 32 points) to 8156.85. The S&P hasn’t been able to close above 3,000 yet, but still rose 0.28% to 2997.95. The Dow increased 0.09% (or nearly 24 points) to 27,025.88.

When we last left Netflix, the streaming giant was soaring after hours on Wednesday following a solid report that included a positive earnings surprise and a better read on subscribers than the previous quarter.

Shares rose nearly 2.5% on Thursday to give the market a nice boost, while providing a strong opening round for the FAANGs.

Meanwhile, Morgan Stanley continued the strong showings for its space on Thursday by beating earnings expectations in the third quarter and rising more than 1.5% in the session.

The big banks have been a major reason for this strong start to earnings season, while helping to calm the nerves of jittery investors who were expecting much more disappointment. Before the solid performance from MS, we saw excellent showings from JPMorgan on Tuesday and Bank of America on Wednesday, among others.

And believe it or not, there’s a possibility that this three-year-long Brexit drama could finally be coming to an end. The UK and EU worked out a tentative deal.

Unfortunately, it still has to be approved by Parliament, which will be no small hurdle. Odds of it passing are not high. Nevertheless, it’s the first bit of good news in a long time and was another positive for the market on Thursday.

A trade agreement last week and a Brexit agreement this week? Well, sort of. Let’s just call it potential progress on both fronts, which is certainly an improvement but not a resolution.

Fortunately, investors can focus on a solid start to earnings season and a good chance for another week of gains. By the way, Friday would be a great time for the S&P to finally get back above 3,000!

Today's Portfolio Highlights:

Surprise Trader: It must be earnings season, because Dave just made his fourth pick in as many days! On Thursday, he added CoreLogic (CLGX) with a 12.5% allocation. The stock is part of the highly-ranked Consulting Service space, which is in the Top 15% of the Zacks Industry Rank. Specifically, CLGX provides consumer, financial and property information, analytics and services to business and government. This Zacks Rank #1 (Strong Buy) has beaten earnings estimates for three straight quarters and has a positive Earnings ESP of 1.4% for the upcoming report on Thursday, Oct 23 after the bell. Read the complete commentary for more on this new addition.

Blockchain Innovators: Some industries just seem like obvious places for blockchain technology, such as the money transfer space. So its really no surprise that MoneyGram International (MGI) would partner up with Ripple to use its XRP technology to handle cross-border transfers of digital funds. The deal is worth about $50 million for about 2 years, which shows how important MGI finds this technology. Dave added this Zacks Rank #2 (Buy) on Thursday because the deal gives the portfolio direct blockchain exposure (through Ripple). Read the full write-up for more.

Technology Innovators: "We are rolling through earnings season and so far so good. The bank stocks have pretty much reported that things look good on their front and even with bad numbers NFLX popped 10% after hours but only managed to hang on to 2.45% of that gain by the close today.

"All in all, the early reports are suggesting that this will be a good earnings season. Expectations have been held in check due to the trade war, so even mild outperformance will be warmly greeted by investors. The key, as always will be guidance.

"A word on the guides that are coming this earnings season. We have the potential for phases of a deal with China … and that may not be what Trump said he will do, but if we get anything that is a step in the right direction. It is up in the air how long a phase 1 will take to hammer down, but that will give us a guideline to expect a similar timeline for phase 2 and 3. Add to that the chances of another rate cut coming and you have some broad tailwinds at our back."
-- Brian Bolan

Insider Trader: "This was supposed to be the quarter where things were "bad." But who has reported a really bad report so far? I can't even think of one. No one. Not yet.

"And while there will be some in the industries most impacted by the tariffs, US companies are still humming along.

"We also got the weekly jobless claims report today and it came in at 214,000. That's still near the all-time lows around 200,000. The job market remains tight and healthy.

"Like I said, all signs are pointing to a breakout in the S&P 500 imminently."
-- Tracey Ryniec

Have a Good Evening,
Jim Giaquinto

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