Weekly Market Overview
This week was significant for earnings and economic news, resulting in a mostly lower close for major indices. The S&P 500 declined by 1.4%, the Nasdaq Composite fell by 1.5%, and the Dow Jones Industrial Average decreased by 0.2%. However, the Russell 2000 managed a slight gain of 0.1%.
Performance of Mega Cap Stocks
- Alphabet (GOOG, Financial) and Amazon.com (AMZN, Financial) saw increases of 3.4% and 5.4%, respectively, after their earnings reports.
- Apple (AAPL, Financial), Meta Platforms (META), and Microsoft (MSFT, Financial) experienced losses ranging from 1.1% to 4.2% post-earnings.
The Vanguard Mega Cap Growth ETF (MGK) ended the week 1.8% lower.
Chipmakers' Performance
Chipmakers showed weakness, with Advanced Micro Devices (AMD) dropping 9.2% due to earnings and soft Q4 revenue guidance. Consequently, the PHLX Semiconductor Index (SOX) fell by 4.1%.
Economic News Highlights
- Initial jobless claims were low at 216,000.
- The Q3 Employment Cost Index rose by 0.8%.
- Personal income increased by 0.3% in September, while personal spending rose by 0.5%.
- The core-PCE Price Index remained at 2.7% year-over-year for the third consecutive month.
- Private-sector payrolls increased by 233,000 in October, with real GDP growing at an annual rate of 2.8% in Q3.
- Pending home sales jumped 7.4% in September.
- Nonfarm payrolls increased by just 12,000, with nonfarm private payrolls decreasing by 28,000.
The jobs data was affected by the Boeing strike and hurricanes, suggesting a softness in hiring activity.
Treasury Yields
Treasury yields increased sharply this week. The 10-year yield rose by 13 basis points to 4.36%, while the 2-year yield increased by ten basis points to 4.20%.
Indices Performance Summary
- Nasdaq Composite: -1.5% for the week / +21.5% YTD
- S&P 500: -1.4% for the week / +20.1% YTD
- Dow Jones Industrial Average: -0.2% for the week / +11.6% YTD
- S&P Midcap 400: -0.2% for the week / +11.6% YTD
- Russell 2000: +0.1% for the week / +9.0% YTD
Monday's Market Activity
The equity market closed with gains in major indices, supported by influential earnings reports. Stocks maintained an upward trend despite rising Treasury yields. No significant U.S. economic data was released.
Tuesday's Market Activity
The Nasdaq Composite reached a record close, increasing by 0.8%. Mega caps and chipmakers led the gains. Alphabet (GOOG, Financial) was a notable winner ahead of its earnings report. Treasury yields rose following a strong Consumer Confidence report but settled little changed.
- August FHFA Housing Price Index: 0.3%
- August S&P Case-Shiller Home Price Index: 5.2%
- October Consumer Confidence: 108.7
- September JOLTS - Job Openings: 7.443 million
- September Adv. Intl. Trade in Goods: -$108.2 billion
- September Adv. Retail Inventories: 0.8%
- September Adv. Wholesale Inventories: -0.1%
Wednesday's Market Activity
The stock market had a mixed showing. Initial gains were due to positive economic releases and Alphabet's (GOOG, Financial) strong quarterly results. However, early buying enthusiasm waned without a specific catalyst. Stocks pulled back but downside moves were limited.
- Weekly MBA Mortgage Applications Index: -0.1%
- October ADP Employment Change: 233K
- Q3 GDP-Adv.: 2.8%
- September Pending Home Sales: 7.4%
Thursday's Market Activity
Major indices recorded losses, with Microsoft (MSFT, Financial) and Meta Platforms (META) contributing to the decline. The Vanguard Mega Cap Growth ETF (MGK) dropped 3.0%. Chipmaker weakness and Treasury market volatility also affected equities.
- Initial jobless claims: 216,000
- Q3 Employment Cost Index: 0.8%
- Personal income: +0.3% in September
- Personal spending: +0.5% in September
- October Chicago PMI: 41.6
- Weekly EIA Natural Gas Inventories: +78 bcf
Friday's Market Activity
The stock market ended with gains after Thursday's decline. Major indices closed below session highs as buying enthusiasm waned. Economic data supported expectations of a steady Fed rate-cut path. Treasury yields fluctuated, affecting equity market buying.
Guru Stock Picks
Tom Gayner has made the following transactions:
- Reduce in WHR by 44.12%
- Sold out in HGTY.WS
- Add in LOW by 2.15%
- New position in EL
John Hussman has made the following transactions:
- Reduce in ADBE by 95%
- Sold out in ALGM
- Add in DELL by 40%
- New position in ASB
Today's News
Amazon (AMZN, Financial) and Intel (INTC, Financial) experienced a post-earnings rally, helping U.S. stocks end higher on Friday. Despite mixed quarterly results from major tech firms and external factors like hurricanes and a Boeing (BA) strike, Wall Street managed to navigate the week with some losses. Investors remain cautious ahead of the election, as indicated by the elevated VIX and demand for S&P 500 puts.
In a significant move, Indonesia has banned the sale of Pixel smartphones by Alphabet (GOOG, Financial) due to new regulations requiring local manufacturing content. This mirrors a recent ban on Apple's (AAPL, Financial) iPhone 16 for similar reasons. Although these brands are not among the top five in Indonesia, the move highlights increasing global protectionist trends.
Berkshire Hathaway (BRK.A, BRK.B) is set to release its Q3 earnings report, which is highly anticipated as it reflects broader U.S. economic conditions. The conglomerate's diverse holdings, from insurance to railroads, make its results a bellwether for various sectors.
Hedge funds have increased their equity-risk exposure for the second consecutive month, with Jefferies noting a significant rise in long positions, particularly in Industrials and Materials. Financials saw the most names moving to short positions, with notable changes in stocks like AMD and Johnson & Johnson (JNJ).
Microsoft (MSFT, Financial) is reportedly planning to spend nearly $10 billion on server rentals from AI startup CoreWeave, a company backed by Nvidia (NVDA, Financial). This substantial investment underscores Microsoft's commitment to expanding its AI capabilities as CoreWeave prepares for a potential IPO in 2025.
Speculation surrounds Donald Trump's social media platform, Truth Social (DJT, Financial), with rumors suggesting a possible acquisition by Elon Musk's platform X. While unconfirmed, these talks have fueled a rally in Trump's media firm.
Myriad Genetics (MYGN, Financial) saw a significant drop in stock value after UnitedHealth Group (UNH) announced it would cease coverage of Myriad's GeneSight test, labeling it as "unproven." This decision impacts a significant revenue stream for Myriad, leading to market concerns over future coverage policies.
Super Micro Computer (SMCI, Financial) has amended its loan agreement with Cathay Bank, extending deadlines for financial reporting amidst ongoing governance challenges. The amendment includes a requirement to maintain a minimum of $150 million in unrestricted cash.
Interactive Brokers (IBKR) reported a notable increase in Kamala Harris' odds of winning the U.S. presidential race on its prediction platform. This shift, occurring over a 24-hour period, reflects heightened trading activity and changing market sentiments.
Exxon Mobil (XOM, Financial) announced a quarterly dividend increase, reflecting its strong performance, particularly in the Permian Basin. The company continues to be a significant player in the energy sector with promising Q3 results.
Chubb Limited (CB, Financial) reported estimated losses due to Hurricane Milton, impacting its property and casualty insurance businesses. Despite these challenges, Chubb continues to outperform with strong underwriting results.
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