Market Recap Week Ending October 30th

Monday – Dow (650) to 27,685 NDAQ (189)to 11,358 and the S&P (64) to 3,400. Massive new Covid19 infection numbers in Europe and the United States combined with a stimulus bill reality check from both White House Chief of Staff, Mark Meadows and Speaker Pelosi forced a repricing of the indices today. The U.S. saw more than 83k new cases both Friday and Saturday which topped the previous high of 77.3k new cases in July. In Europe, Spain has ordered a nationwide curfew and Italy tightened restrictions over the weekend. On the stimulus front, Meadows and Pelosi accused each other of “moving the goalposts.” The Speaker stressed that the major sticking point at this time lies in a testing strategy within the legislation. The airlines and cruise lines all traded down sharply on the dual dose of bad news. The stay-at-home names fared better; Amazon (AMZN) was up 8 basis points (0.08%), Neflix (NFLX) was down 1bp, and Zoom (ZM) was up 1.23%…Twilio (TWLO) reported post close and traded down an additional 1% despite beating top and bottom-line estimates…F5 Networks (FFIV) jumped 4% in extended hours after beating quarterly estimates…AIG (AIG) rallied 7% after the bell when it announced it will separate its life and retirement businesses from AIG…Dunkin’ Brands was up 16% on news that it will be acquired by private equity shop Roark Capital…SAP (SAP) swooned 23% after cutting earnings and revenue forecasts for 2020…AstraZeneca (AZN) said that their CVD19 vaccine produces an immune response among adults…Pfizer (PFE), which had previously promised a CVD19 vaccine update in October, has been silent throughout the month, prompting worries that their efforts have stalled. Tomorrow, they report earnings so perhaps an update will be forthcoming….

Tuesday – Dow (222) to 27,463 NDAQ +72 to 11,431 and the S&P (10) to 3,390. Covid and stimulus; bad news and no news, respectively. AMD (AMD) announced that they will buy rival semi manufacturer Xilinx (XLNX); XLNX popped 8.5% and AMD fell 4%…Schwab will lay off 1,000 employees after their $26 billion merger with TD Ameritrade…Restaurant Brands (QSR) reported better revs and earnings. The owner of Burger King, Tim Horton’s, and Popeyes traded down 3.5% despite the good numbers…3M (MMM) beat top and bottom-line expectations yet fell 3%…Caterpillar (CAT), beat lowered expectations but traded down 3.25% due a large drop in Q3 earnings…Eli Lilly (LLY) fell 7% after missing their numbers…Harley-Davidson rallied 22% after reporting better than expected results…Shopify (SHOP) popped 3.78% after revealing a partnership with TikTok. Shopify is up 172% YTD…Covid19 update: the United States set another 7-day average of new infections with 69,967 new cases per day over the last week. 36 states reported increases in hospitalized patients…Pfizer (PFE) reported mixed Q3 numbers and finally gave a much anticipated, but ultimately disappointing CVD19 vaccine trial update. The drug manufacturer has enrolled more than 42,000 volunteers in their phase three, two-dose Covid19 vaccine trial. The company plans to apply for emergency use authorization with the FDA next month. Despite that, the company disappointed analysts when they stated that they did not expect to release preliminary results from the trial before the election. The data had been expected before the end of this month…Durable goods orders for September came in at 1.9% expectations of 0.4% which could indicate even further upside to Q3 GDP.

Wednesday – Dow (943) to 26,519 NDAQ (426)to 11,004 and the S&P (119) to 3,271. Holy volatility Batman! The VIX index, which measures fear in the market, zoomed to 40 today after being range bound between 25 and 30 since the scary days of March. The explosion of Covid cases here and in Europe pushed European equities lower and the U.S. markets followed suit upon the open. Both France and Germany announced new partial shutdowns/restrictions…No surprise that the cruise and airlines were hit hard today but leading all eleven S&P sectors lower were tech, energy, and communication services, respectively, all down in excess of 4%…General Electric (GE) fell 2.29% despite beating top and bottom-line expectations…Microsoft (MSFT) beat their numbers but lowered guidance for the next quarter and traded down 4.96%…First Solar (FSLR) bucked the trend and traded up 13.25% after crushing their quarterly numbers…Boeing (BA) reported a smaller loss than expected and announced thousands of additional job cuts; the stock traded down 4.57%… Bed Bath and Beyond (BBBY) announced new financial targets and traded down 12%…Pinterest (PINS) traded up 31% after hours, releasing strong revenue and monthly active user numbers which put a bid under Twitter (TWTR) up 5.5% after hours and Facebook (FB) up 2.46% post close….a key level of support for the S&P is its 200 day moving average (MA) at 3,130…Tomorrow Q3 GDP is released. Expectations are for an annualized rate of 32%. Weekly jobless claims will also be released. Expectations are for 775,000 new claims vs last week’s surprisingly good 787k number.

Thursday – Dow +139 to 26,659 NDAQ +180 to 11,185 and the S&P +39 to 3,310. A relief rally was in the cards today, spurred on by improving jobless claims and a better-than-expected Q3 GDP number; Jobless claims took another leg down, with 751,000 claims reported vs expectations of 787,000 and Q3 GDP was smashing at a 33% annualized rate (mind you Q2 GDP was (31.4%))…Yum Brands (YUM), owners of Taco Bell, Pizza Hut, KFC, and The Habit Burger, traded flat despite beating numbers…Pinterest (PINS) traded up 27% on great numbers…Exxon Mobile (XOM) announced 1,900 job reductions and traded 4.4% higher…Ford Motor (F) traded up 2.6% on great quarterly results…In a move that many had anticipated, streaming behemoth Netflix (NFLX), popped 3.7% after announcing a price hike…Alphabet (GOOG) traded up 3% intraday and another 3% post close after smashing earnings expectations…Facebook (FB) traded up intraday but then sunk 2% in extended trading despite beating quarterly expectations…Amazon (AMZN) faired similarly, trading up intraday but selling off despite announcing a sizable beat on both bottom and top lines…Apple (APPL) dropped 4% after hours on lower than expected iPhone sales…Moderna (MRNA) jumped 8.43% after announcing that they are preparing to launch their CVD19 vaccine. Another 80,662 new cases of the virus and 996 deaths were reported in the U.S. on Wednesday.

Friday – Dow (157) to 26,501 NDAQ (274)to 10,911 and the S&P (40) to 3,269. Pre-election stimulus is officially dead and CVD19 cases continue to rage across the globe. Twitter (TWTR) traded down 21% after reporting disappointing user growth numbers…Amazon (AMZN) sold off 5% despite crushing their numbers…Facebook (FB), reported better numbers last night but traded down 6.3% on declining U.S. and Canadian user bases…Alphabet (GOOG) managed to trade up 3.8% after reporting blow out quarterly numbers…Under Armour traded up 1.58% on good numbers…Chevron (CVX) beat due to aggressive cost cutting measures and traded up 1%…Exxon Mobile on the other hand lost less than expected and reported better revenues but still traded down 1%; the stock has been cut in half this year…Square (SQ) fell 8.82% after the Wall Street Journal reported that Credit Karma will sell their tax preparation business to the payment processing company. Credit Karma is making the sale to prevent antitrust issues arising from their acquisition by Intuit, maker of TuboTax…Cruise lines surged when the CDC announced that the current no-sail order would expire tomorrow and be replaced by a conditional-sail order; companies can resume cruising if they can demonstrate effective health protocols…September Consumer Spending rose 1.4% vs expectations of 1.0%.

The week in review…Dow (1834) or (6.5%) NDAQ (637) or (5.5%) and the S&P  (196) or (5.7%). Jobless claims continued to improve but additional large layoffs were announced by Boeing (BA), Raytheon (RTX), Schwab (SCHW) and Exxon (XOM) that were in addition to their previously announced job cuts. This is a trend that bears watching…GDP was a huge number but still did not get us back to even after Q2’s negative 31.4% print…Consumer spending was also better than expected. The U.S. economy continues to recover but the fear is without the much talked about stimulus being passed, that Q4 growth will be anemic or possible even contract again…The 10-year U.S. Treasury yield continues to move higher despite this week’s poor performance by the equity markets. On October 1st, the 10-year yield was 0.68% and today we closed at 0.88%. That’s a 28% move in a month! The conventional wisdom is that the market is anticipating a Democratic sweep which will allow passage of a massive stimulus bill, which will require the government to issue more bonds…Earnings season update: earnings are down 9.8% year over year, the largest drop since 2009 but thanks to lowered expectations, 86% of S&P companies that have reported thus far have beaten their numbers…As of today, at 5pm EDT, nearly 85 million ballots have been cast via in person and mailed early voting. That number represents just over 62% of all ballots cast in 2016!