Closing Recap

Friday, November 22, 2024

After falling nearly every day of trading last week for the S&P 500, Nasdaq and Russell 2000, major averages finished higher nearly every day this week, as investors used last week’s pullback as another buying opportunity, with the biggest weekly winners being Smallcaps (+4.35%). All eleven S&P sectors finished the week with more than 1% gains, as the rally was broad based behind strong earnings in tech and retail (outside of TGT shares which tumbled on results). U.S. stocks weren’t the only asset class to rally this week as Gold prices jumped over 5% on geopolitical tensions and Bitcoin hit new highs around $100K late day up over 40% this month alone. The euro fell to the lowest level in two years as traders bet the European Central Bank will have to cut interest rates aggressively to bolster the region’s economy. The common currency fell more than 1% to $1.0335, the weakest since November 2022 after data Friday showed business activity in the bloc’s two biggest economies contracted more than expected. Is it a seasonality rally into year end? FOMO? YOLO? Irrational exuberance? market euphoria? AI hype? Whatever it is, stocks remain the place investors are flocking to, not far off record highs for the S&P, Nasdaq, heading into Thanksgiving Day holiday abbreviated week. The Dow Jones Industrials closed at record highs, Nasdaq above 19,000, Russell over 2,400! For the week, the S&P 500 gained 1.68%, the Nasdaq climbed 1.73%, Russell 2000 +4.3% and the Dow climbed 1.96%.

• University of Michigan surveys of consumers 1-year inflation outlook final Nov 2.6% vs prelim 2.6% and final Oct 2.7% and University of Michigan surveys of consumers 5-year inflation outlook final Nov 3.2% vs prelim 3.1% and final Oct 3.0%.
• University of Michigan surveys of consumers sentiment final Nov 71.8 (consensus 73.7) vs preliminary Nov 73.0 and final Oct 70.5, the current conditions index final Nov 63.9 vs prelim Nov 64.4 and final Oct 64.9, and the expectations index final Nov 76.9 vs prelim Nov 78.5 and final Oct 74.1.

• Natural Gas prices slid after hitting the highest price in more than 1 year. CME issued a press release noting that Henry Hub Natural Gas options reached a single day volume record of 561,379 contracts on November 21, surpassing the previous record of 506,500 contracts traded on November 14, 2018. In addition to the single day options record, Thursday was also the highest volume day in 2024 for Natural Gas futures and options, reaching a combined 1,721,017 contracts traded.

• Bitcoin continued its recent rally towards the $100,000 mark that has seen the cryptocurrency surge more than 40% since the U.S. election on expectations President-elect Donald Trump will loosen the regulatory environment for cryptocurrencies. Bitcoin hit highs above $99,400 and boosted several names/miners etc. related to crypto. MSTR shares jumped +13% around $450 after shares fell -16.16% on Thursday BUT still up around 32% on the week and 84% on the month; shares of COIN, MARA, IREN, and others all saw strength.
• The two-year Treasury yield’s eight-week winning streak is the longest since 2022, but the 10-year falls; The 10-year loses 0.017 percentage point this week, to 4.409%, and the two-year gains 0.070 bps to 4.368%.

• ROST delivered EPS ahead of consensus despite a modest shortfall on comps due to weather, some execution headwinds; Q3 EPS $1.48 vs est. $1.40 on sales $5.071B vs est. $5.146B, comps +1%; sees Q4 comps +2-3%, EPS $1.57-1.64 vs est. $1.67; sees FY EPS $6.10-6.17 vs est. $6.13; Q3 operating margin 11.9%, est. 11.2%.
• GRAB double downgraded from Buy to Underperform at Bank America with $4.90 PT noting since Sept 1, Grab stock price is up 70% (vs Nasdaq up 5%), mainly on the back of good Q3 numbers, street’s improving comfort on Grab’s improving FCF profile and Fed rate cuts.
• AMZN down for the 6th day in last 7 below $198 after hitting highs 52-week highs of $215.90 on 11/14.
• CATO suspends regular quarterly dividends.
• DECK topped its prior record high of $184.48 on June 3^rd
• PG shares rose an 8th straight day after investor day comments Thursday where the Co said it has been revamping its marketing and line-up of influencers on fast-growing Chinese shopping app Douyin in recent months.
• TPR announces $2B accelerated share buyback plan.

• In Defense: Truist lowered price tgts for CACI to $550 from $650, PSN to $110 from $130, LDOS 1o $185 from $205, BAH to $155 from $185, ICFI to $140 from $180 saying they still see headline risk as it relates to the Department of Government Efficiency (DOGE) and think a valuation floor could be another 10% below current levels. Strong fundamental results should continue in the near term with CY26E/27E most likely to see the potential effects of lingering uncertainty. KBR remains Truist’s favorite idea followed by CACI and AMTM.
• In Aerospace: strong sector as LUNR shares rose after a nearly 16% jump on Thursday; Roth MKMK raised PT to $20 from $15 earlier. RKLB shares extend recent gains, now up about 140% in 5-weeks as Roth MKM raised its tgt to $30 from $25 today as believes the pending Neutron inaugural launch in mid-2025 will represent "a significant catalyst," particularly with the recent securing of the launch vehicle’s first lead customer contract.
• In Metals & Mining: Gold prices managed a big jump despite a spike in the dollar, however prices for copper and aluminium fell after weaker euro zone business activity pressured the euro, and the dollar strengthened weighing on prices for industrial metals. The euro plunged to a two-year low after the data, and the U.S. dollar index hit a fresh two-year high. Note copper prices have fallen by 12% from a four-month peak hit on Sept. 30.

• Financial Services: INTU shares fell as reported a strong FQ1, outperforming across all key KPIs and while full-year guidance was reiterated, and customary post an FQ1, FQ2 was guided light of expectations on both the top and bottom line. RDDT shares dropped after Advance Magazine Publishers Inc., the arm of the Newhouse family publishing empire that owns Conde Nast, is offering 7.8 million shares for $145.38 to $148.54 each, which would be valued at as much as $1.2 billion. https://tinyurl.com/4xz55fxf

• HALO announced it has withdrawn its non-binding proposal to acquire EVO for €11.00 per share in cash, implying a fully diluted equity value of €2.0B.
• MRNA shares jumped along with other vaccine names (BNTX, PFE, NVAX) as Jefferies, which hosted meeting w management, suggests the RFK Jr nomination as HHD director May have caused investor nervousness, but might not be as bad as believed; doesn’t believe RFK will take away vaccines
• REPL announces FDA Breakthrough Therapy designation for RP1, submission of RP1 BLA under the accelerated approval pathway. The company also announced that the FDA has granted Breakthrough Therapy designation to RP1 in combination with nivolumab in the same setting.
• VKTX was initiated at Buy and $109 tgt at B Riley based on its confidence in the long-term disruptive potential of lead program VK2735 in the fast-expanding obesity/type 2 diabetes (T2D)/metabolic dysfunction-associated steatohepatitis (MASH) landscape.

• In Health Services: HIMS shares advanced late on Thursday after the release of a Joint Status Report that suggested persisting signs of shortages of Tirzepatide coupled with continued growth of production + demand of compounded versions of the drug

• BIDU was downgraded to Equal Weight from Overweight at Barclay’s and cut tgt to $83 from $115 saying the move to generative artificial intelligence exacerbates the pressure on Baidu’s advertising. Persistently declining ads revenue is also likely to drive the company’s margins lower. (China US listed stocks down in general)
• ESTC shares surged after reported Q2 results that were above revenue estimates at 18% Y/Y growth (17% in CC), with Elastic Cloud growing at 25% Y/Y, including some larger customers that grew consumption better than plan; also increased its Q3 and FY25 revenue growth outlook by ~1% and sees FY25 op margins 14% (was 12.5%).
• GOOGL shares fell a second day after the Information reported that OpenAI is considering developing a web browser and recently struck deals to power search features for retail, travel and other websites.
• NFLX had a strong week rising roughly 9%, benefiting from the company’s boxing match between Mike Tyson and Jake Paul last weekend.
• NTAP delivered a modest beat to Q2 and raised full-year guidance, supported by strength in All-Flash-Array sales (ARR +19% YoY to $3.8B); raised FY25 adj EPS to $7.20-$7.40 from prior $7.00-$7.20 (est. $7.11), revs to $6.54B-$6.74B from $6.48B-$6.68B and also guides adj operating margin to 28% to 28.5%, from prior 27% to 28% (shares opened higher but reversed after the open to finish lower)