Polling day could be a volatile one for markets. But investors shouldn't get carried away with the result-or no result, if vote counting drags on for days.
We're unlikely to know the winner between Vice President Kamala Harris and former President Donald Trump immediately after voting closes today. That means the market could swing in various directions as traders try to position themselves ahead of the outcome.
For those tempted to trade on the result, there are plenty of ways to express a view. Expect a Trump win and you might want to get into Trump Media stock -- the social-media platform majority owned by the former president, which has largely traded as a proxy for his election chances, or back the dollar against the Mexican peso and stock up on Bitcoin. A Harris victory might mean going big on solar and electric-vehicle stocks, looking to benefit from Democrat policies friendly to the clean-energy sector.
However, the truth is that for most investors with a diversified portfolio, trading the election is a bad idea. There's not much evidence either outcome will really change the economy. The S&P 500 does have a notably higher average return during Democratic presidential terms than Republican ones -- 52% against 17% respectively. However, that is skewed by the timing of recessions, which can only tenuously be linked to domestic politics.
For the optimists, take heart from the fact that the stock market has generally risen under presidents from both parties. For the pessimists, it's time to fret that both candidates have policies that are expected to widen the federal budget deficit and potentially stoke inflation. Either way, it isn't wise to lose your cool.
-- Adam Clark
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As Nvidia Tries to Overtake Apple, Palantir Raises AI Bar
As artificial intelligence leader Nvidia closed in on Apple's status as the world's biggest company, from a market value perspective, fellow AI stock Palantir beat expectations for third quarter earnings and raised its outlook, saying it sees unwavering demand for AI technology from government and commercial customers.
-- AI chip maker Nvidia is getting a boost from spending on the technology
throughout the tech industry. Its market value briefly eclipsed that of
iPhone maker Apple on Monday but ultimately closed just short of the
mark. The stock will join the Dow Jones Industrial Average this week.
-- Nvidia's market value is $3.337 trillion versus Apple's $3.356 trillion,
according to Dow Jones Market Data. Big tech companies' combined capital
spending is expected to rise 50% this year, to $222 billion, UBS Global
Wealth's chief investment officer Mark Haefele said. It will rise another
20% next year.
-- Palantir reported third-quarter adjusted earnings of 10 cents a share on
revenue of $725.5 million. Government revenue, which makes up most of its
total sales, rose 40% from the same time last year, to $320 million.
Commercial revenue rose 54% from the previous year to $179 million.
-- CEO Alex Karp said in a letter to shareholders that Palantir's business
growth is accelerating. Wedbush analyst Dan Ives said more use cases for
Palantir's entire portfolio will meet the rising demand for
enterprise-scale solutions while gaining further share in the AI
Revolution.
What's Next: Palantir is raising its revenue guidance for the year to between $2.8 billion to $2.81 billion. The company previously said that it was expecting revenue for the year between $2.7 billion to $2.8 billion.
-- Adam Clark, Tae Kim, and Angela Palumbo
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Boeing Union Workers Vote to End Strike
Boeing finally got some good news. The airplane maker reached a deal with union employees late Monday to end a damaging strike, allowing the focus to shift to other significant issues, such as making more planes.
-- Workers voted for a contract that delivers a 38% pay increase over four
years -- the fourth offer from Boeing management. It also includes a
$12,000 bonus for ratifying the deal, the IAM union said late Monday.
-- The accepted deal, voted for by 59% of workers, will raise average
machinist wages from roughly $76,000 to $119,000 a year, according to
Boeing. That is a little better than the base wage increases imply
because Boeing includes some seniority benefits in its calculations.
-- At the top of the wage scale, a machinist could make roughly $153,000 in
2028 before overtime. The company could also pay an additional $17,000 to
$18,000 into a 401(k) if individual contributions are maxed out.
-- The Monday labor vote came on the heels of Boeing raising more than $20
billion in new capital by selling preferred and common stock. That cash
made a significant dent in Boeing's $50 billion-plus total debt balance.
Fixing the balance sheet and ending the strike were two items on
investors' to-do list for Boeing management.
What's Next: The post-strike era for Boeing will be all about plane production. Investors will look for the company to ramp up 737 MAX production to the 38 planes a month now allowed by the Federal Aviation Administration.
-- Al Root and Callum Keown
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Family Ties Complicate Accounting Questions at Super Micro
Family ties between Super Micro Computer's CEO Charles Liang to some of the server maker's biggest suppliers had been of little apparent concern, though they were disclosed. But with the company's auditor resigning, citing an unwillingness to be associated with management's financial statements, they could attract fresh scrutiny.
-- Liang's wife sits on Super Micro's board, and his brothers run the
Taiwan-based firms that manufacture server enclosures, power supplies,
and other vital components for Super Micro products. Steve and Bill Liang,
are the chief executives of Ablecom and Compuware, respectively,
disclosures say.
-- The two siblings are part owners of the companies they lead and sit on
the boards of one another's firms. Charles Liang and his wife Sara Liu
are also shareholders of Steve Liang's Ablecom. Business with Super Micro
makes up a majority of net sales for Ablecom and Compuware.
-- Super Micro and Ablecom are also partners in the venture that manages the
Super Micro Asia Science and Technology Park, a Taipei-area business
campus where both companies have offices. Compuware "manufactures
motherboards, backplates and other components used on printed circuit
boards" for Super Micro, according to quarterly filings.
-- Ernst and Young, the auditing firm that quit, had previously told Super
Micro's audit committee that it had concerns about "matters relating to
governance, transparency and completeness of communications," Super Micro
said in a securities filing last week.
What's Next: Super Micro's last audited financial report was for the three months ended March 31. After delaying its 10-K for the fiscal year ended June 30, Super Micro has until Nov. 16 to file or to submit a plan to the Nasdaq to regain compliance with listing rules.
-- Jacob Adelman and Angela Palumbo
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Amazon's Nuclear Ambitions Zapped by Federal Commission
Amazon's plan to draw massive amounts of electricity directly from a Pennsylvania nuclear reactor instead of the electrical grid to power its artificial intelligence applications is now held up by a federal regulator's ruling. The Federal Energy Regulatory Commission said Amazon's plan leaves many questions unanswered.
-- A concurring opinion said Amazon's plan could have huge ramifications for
grid reliability and consumer costs. Nearby utilities objected to the
plan, complaining that it would siphon power from the grid without
helping to pay for the infrastructure that serves local consumers.
-- Big tech has embraced emissions-free nuclear power to power its
electricity-hungry AI. Amazon's data center campus next to Talen Energy's
Susquehanna nuclear reactor could consume as much as 960 megawatts of
capacity. Microsoft has agreed to buy power from Three Mile Island, where
Constellation Energy is planning to restart a nuclear reactor.
-- Talen Energy said the commission's concerns were misplaced and that it is
evaluating its options. Amazon didn't respond to Barron's request for
comment. The amendment could potentially be resubmitted, allowing the
Amazon deal to move forward.
-- The FERC ruling will still allow Amazon to use 300 megawatts of power
from the reactor, but not an additional 180 megawatts as it had proposed
to do. Amazon didn't disclose what it was paying for the power.
What's Next: Jefferies analyst Julien Dumoulin-Smith called the FERC ruling a major setback for the nuclear data center investment thesis. When Amazon signed the deal, investors bought other nuclear power plant stocks on expectations they would sign similar agreements.
-- Avi Salzman and Janet H. Cho
***
Changing Consumer Tastes Threaten Happy Hour for Casual Dining
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November 05, 2024 06:49 ET (11:49 GMT)
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