November 19 Market Recap

November 19 Market Recap

November 19 Market Recap – Reports of the consumer’s demise greatly exaggerated. Retailers crush their earnings numbers. Covid surge at home and abroad. Next week: markets closed on Thursday, close early on Friday, a slew of economic releases and possibly a new Fed Chairperson. 

Indices 

Dow 35,601 (499) or (1.4%)  

Nasdaq 16,057 +197 or 1.2% 

S&P 4,697 +15 or 0.32% 

U.S. 10 Year Treasury Yield 1.576%, (3.4 bp) or (2.1%) 

The U.S. Consumer Hurting? Think Again! 

Retail sales roared back to beat expectations and more than doubled last month’s number. Home Depot (HD), Target (TGT), Lowe’s (LOW), Williams-Sonoma (WSM), TJ Maxx (TJX), Kohl’s (KSS), Macy’s (M), Ross Stores (ROST), and BJ Wholesale Club (BJs) all crushed their 3rd quarter estimates. Empire State manufacturing and the Philly Fed numbers bounced back strongly despite global supply chain and labor scarcity issues. Despite the incredible retail results, the big winner of the week was technology with a focus on the consumer (APPL +7% for the week) and semiconductors (NVDA +8.5%, QCOM +12%).   

Covid-19 Surge? 

Covid cases are back on the rise both home and abroad. 110,304 new cases of the virus were reported today vs the 7-day average of 94,669 cases. The fact that hospitalizations remain relatively unchanged speaks either to the fact that it is a lagging indicator or that between vaccinations and natural immunities, the public is better protected than it was this summer. That said, the market is starting to pay attention and Austria’s decision today to mandate vaccines and lockdown again was a shot across the bow. 

Next Week 

Earnings will continue to trickle in during next week’s shortened session (closed Thursday and early close on Friday). However, that doesn’t mean the week will be slow as there is a slew of economic data being released.  Initial jobless claims, Durable Goods Orders, Personal Income, Core CPI, among other data points will all be released on Wednesday and could result in market volatility going into the holiday.  

Another potential market-moving decision should come next week in the form of either a new or reconfirmed Federal Reserve Chair. President Biden has interviewed both the current Chair, Jerome Powell (R – appointed to the Fed by President Obama and named Chair by President Trump) and Fed Governor Lael Brainard (D – and supported by the progressive wing of the Democratic party). Market reaction to Powell would most likely be muted as the markets know what to expect whereas Brainard is considered more dovish than Powell and equity markets could likely bounce higher along with expectations of future inflation and thus a rise in Treasury yields as well. 

There will be no market recap next week. Happy Holidays!!!! 

Market Data Points Next Week 

• Monday – Earnings: Zoom Video (ZM), Urban Outfitters (URBN). 
• Tuesday – November Markit Manufacturing and Services Flash PMI. Earnings: Best Buy (BBY), Nordstrom (JWN), Gap (GPS), VMWare (VMW), Dick’s Sporting Goods (DKS). 
• Wednesday – Initial Jobless Claims, Durable Goods Orders, Personal Income, Consumer Spending, Core CPI, University of Michigan Consumer Sentiment, FOMC minutes. 
• Thursday – Markets closed in observance of Thanksgiving. 
• Friday – Equity markets close at 1:00 EST. 

November 19 Market Recap Trading… 

Monday– Dow (13) to 36,087, Nasdaq (7) to 15,853, S&P +0 to 4,682. 

• Seven of the eleven S&P sectors traded higher today with the defensive sectors, Utilities, Energy and Consumer Staples leading the rally. 
• November Empire State Manufacturing roared back to print at 30.9 vs expectations of 22. 
• President Biden signed the $1.3 trillion infrastructure bill into law today. 
• Earnings: Tyson Foods (TSN) beat numbers and climbed 3.55%. WeWork (WE) beat revenues and lost less than the previous quarter and climbed 3.38% in its first report as a publicly traded company. Rackspace (RXT) beat their numbers and rose 8.74% post-close. Lucid Group (LCID) lost $524 million for the quarter, $1.5 billion year to date but confirmed reservations for 17,000 of its Air EV which represents an order book of $1.3 billion. The stock rose 2.16% during the regular session. 
• The 10-year U.S. Treasury gained nearly 5 bp 1.621%. 

Tuesday – Dow +54 to 36,142, Nasdaq +120 to 15,973, S&P +18 to 4,700. 

• The U.S. Consumer is alive and well! Retail sales and big box store earnings boosted the markets today. 
• October Retail Sales were up 1.7% vs expectations of a 1.5% increase and vs last month’s paltry 0.8% increase. 
• Earnings: Home Depot (HD) beat numbers and said Q4 numbers were running ahead of expectations. HD traded up 5.73% today in the regular session. Walmart (WMT) beat their numbers as well but sold off 2.55% despite the good report. 
• Holy EVs Batman! Lucid Group (LCID) traded up nearly 24% (and its market capitalization is now greater than that of Ford’s (F)) as the Street cheered on last night’s quarterly report 
• Only four of the eleven S&P sectors traded in the green today led by Consumer Discretionary, Tech, and Healthcare.  
• The 10-year U.S. Treasury yield traded rose 2 bp to 1.64%  

Wednesday – Dow (211) to 35,931 Nasdaq (52) to 15,921, S&P (12) to 4,688. 

• For consecutive sessions, only four of eleven S&P sectors traded up today led Real Estate, Consumer Discretionary, and Health Care. Energy and Financials were the two worst performers down 1.74% and 1.11% respectively. 
• Earnings: NVIDIA (NVDA) beat and raised Q4 guidance: the stock traded up 5.17% post-close. Target (TGT) also beat and raised guidance but traded down after stating that they are trying to protect prices and thus margins could be threatened; TGT traded down 4.73% in the regular session. Cisco Systems (CSCO) missed slightly on revenues, beat slightly on earnings and traded down 6.08% in the extended session. Lowe’s (LOW) beat numbers, raised guidance and the Street didn’t care as LOW only traded up 0.01% post-close. 
• The 10-year U.S. Treasury yield fell 5 bp to 1.595% in response to the inflation data. 

Thursday – Dow (60) to 35,870, Nasdaq +72 to 15,933, S&P +15 to 4,704. 

• Today was the third consecutive session that only four of the eleven S&P sectors traded positively. Consumer Discretionary, Technology, and Health Care led the way. 
• Initial Jobless Claims were a bit disappointing at 268,000 vs expectations of only 260,000 claims. Last week’s number was slightly revised higher to 269,000 claims. 
• November Philly Fed printed at 39 vs expectations of 23 confirming the Empire State Manufacturing number. 
• Earnings: Alibaba (BABA) warned of slowing growth and dropped 11% in the regular session. Applied Materials (AMAT) blamed supply chain issues for missing their numbers and that stock dropped 5.10% post-close. Macy’s (M) crushed their earnings number, beat their revenue estimate and traded up 21.17%. Kohl’s (KSS) also crushed their earnings, beat their revenue expectations and traded up 10.62% in the regular session. BJ’s Wholesale (BJ) beat their numbers handily and traded up 19.94% in the regular session. Ross Stores (ROST) traded up 2.57% on their earnings announcement. Nuance Communications (NUAN) was relatively unchanged after their earnings call. JD. Com (JD) traded up 5.95% after their earnings call. Workday (WDAY) beat on both top and bottom lines but still traded down 7.8% post-close. Williams-Sonoma (WSM) beat numbers, raised guidance, and their stock fell 7.73%. 
• The 10-year U.S. Treasury yield was down 1.4 bp as 1.581%. 

Friday – Dow (268) to 35,601, Nasdaq +36 to 16,057 (record close), S&P (6) to 4,697.  

• Breadth continued to be poor today as only three of eleven S&P sectors traded positively today led by Technology, Utilities, and Consumer Discretionary. 
• The House of Representatives passed the Build Back Better infrastructure bill along a strict party line vote (no GOP members voted in favor). The bill, which will either slightly add to or decrease the Federal deficit depending on source used, provides funding for fighting climate change ($555 billion), universal pre-K ($400 billion), child tax care credits ($200 billion), four weeks of paid family leave ($200 billion), reducing Affordable Healthcare Act premiums ($165 billion) and many other items, now goes to the Senate where it faces an uncertain fate. All eyes are upon Senators Manchin (WV) and Sinema (AZ).  
• Fed Governor Christopher Waller raised the prospect of tapering more rapidly today in light of the more recent inflation data. Fed Vice Chair Richard Clarida also had hawkish comments regarding inflation. Their remarks helped send the 10-year yield lower. 
• The 10-year U.S. Treasury yield declined 4 bp to 1.542% which gave impetus to the tech/growth rally in the Nasdaq. 

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Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.