November 5 Market Recap
November 5 Market Recap – Markets soared on the continued third quarter earnings bonanza. Despite good economic data, the 10-year Treasury yield fell precipitously, perhaps due to Fed’s tapering announcement. Next week another inflation data point.
Dow 36,327 +508 or 1.4%
Nasdaq 15,971 +473 or 3.0%
S&P 4,605 +92 or 2.0%
U.S. 10 Year Treasury Yield 1.564%, (11.3 bp) or (7.3%)
Markets Soar on Continued Bullish Earnings
Much like last week and the week before, earnings continued to dominate the market narrative. The resort and hospitality sector reported especially strong numbers as travel makes its comeback: Marriott Hotels (MAR), Hyatt Hotels (H), Booking Group (BKNG), Expedia (EXPE) and Airbnb (ABNB) all reported solid if not spectacular numbers. Consumer discretionary names were also quite good: Under Armour (UA), Estee Lauder (EL), Electronic Arts (EA), and Etsy (ETSY). Not even the Fed’s announcement that the spigot of easy money was going to be turned down and eventually turned off could derail the momentum that the markets had this week.
The data was pretty good again this week. While manufacturing PMI missed, it still demonstrated expansion and the services PMI beat its expectations. Initial jobless claims set a second straight pandemic era record. The non-farm payrolls report on Friday was much stronger than anyone expected with the added sweetener that September’s horrible number was revised significantly higher.
Late Friday night, the House, passed the “hard” infrastructure bill that carries $1.2 trillion in spending, $550 billion of that in new spending for bridges, roads, airports, railroads, public transit, ports, electric vehicle charging networks, power infrastructure, broadband, and water infrastructure. The “soft” infrastructure bill will continue to be negotiated and supposedly will be voted on no later than November 15. It will be interesting to see the reaction to this new legislation when the markets open on Monday morning. Will it push those affected industries higher, or will it be welcomed with a yawn or perhaps even a “sell the news” downturn?
Initial Jobless Claims and Core CPI will be moved up from Thursday to Wednesday as the markets will be closed on Thursday in observance of Veteran’s Day. As a reminder, the holiday used to be called Armistice Day and marked the end of World War I on the eleventh hour of the eleventh day of the eleventh month of 1918. President Eisenhower changed the name of the holiday to Veteran’s Day in 1954.
Market Data Points Next Week
Monday – Earnings: PayPal (PYPL), AMC Entertainment (AMC), Advanced Micro Devices (AMD), Nvidia (NVDA).
Tuesday –Earnings: Wynn Resorts (WYNN), Coinbase (COIN), DoorDash (DASH).
Wednesday – Initial Jobless Claims, Core CPI. Earnings: Disney (DIS), Mastercard (MA).
Thursday – Veteran’s Day, no economic data releases.
Friday – Job Openings and Labor Turnover Survey (JOLTS), November Univ Michigan Preliminary Consumer Sentiment.
November 5 Market Recap Trading…
Monday– Dow +94 to 35,913 (record close), Nasdaq +97 to 15,595, S&P +8 to 4,613 (record close).
- All three indices closed at record highs for the second consecutive session despite mixed manufacturing data.
- October Markit Manufacturing PMI missed at 58.4 vs 59.3 while ISM Manufacturing PMI beat at 60.8% vs 60.3%. Click for more on PMI here.
- Eight of the eleven S&P sectors traded higher today with Energy, Consumer Discretionary, and Utilities leading the rally.
- For the second consecutive Monday, Tesla (TSLA) ripped higher (+8.49%), announcing a three-year extension with China’s Ganfeng for lithium products (crucial for the manufacturing of the car maker’s batteries).
- The 10-year U.S. Treasury remained relatively unchanged at 1.562%.
Tuesday – Dow +138 to 36,052 (record close), Nasdaq +53 to 15,649, S&P +17 to 4,630 (record close).
- Earnings continued to push the markets higher as all three indices closed at record highs for the third consecutive session.
- Nine of the eleven S&P sectors traded in the green today led by Materials, Real Estate, and Technology.
- Earnings: The Good…Pfizer (PFE) crushed their numbers, raised guidance and traded up 4.15%. Under Armour (UA) beat their numbers, boosted 2021 guidance and soared 13.93%. Dupont (DD) beat and traded up 8.79%. Estee Lauder (EL) beat and traded up 4.14%. The Bad…Caesars Entertainment (CZR) missed their numbers and traded down 3.34% after hours. Zillow (Z) will exit the home buying business after buying more than 14,000 homes in six months and losing a combined $550 million over the third and fourth quarters.
- The 10-year U.S. Treasury yield traded down 2.3 bp to 1.539%.
Wednesday – Dow +105 to 36,157 (record close), Nasdaq +162 to 15,811 (record close), S&P +30 to 4,660 (record close).
- Federal Reserve Chairman Powell announced that the Fed’s asset purchases would be tapered beginning this month and again in December by $15 billion each month. After December, the Fed would look at the data to guide it towards either further tapering, a delay in tapering or perhaps even increasing asset purchases again. He also announced that the Fed still believed inflation pressures to be transitory and supply oriented and not due to spiraling wage inflation and indicated that there were no plans to raise rates at the conclusion of the asset purchasing program. This eased the concern of market observers and led to markets reversing and finishing for the fourth consecutive day at record highs.
- The 10-year U.S. Treasury yield rose nearly 5 bp to 1.587% in response to the Fed announcement.
- The October ADP Employment report announced 517,000 jobs added vs expectations of 395,000.
- Final October Markit Services PMI beat at 58.7 vs 58.5 as did ISM Services PMI at 66.7% vs 62%.
- Eight of eleven S&P sectors traded higher today led by Consumer Discretionary, Materials and Consumer Staples.
- Earnings: Qualcomm (QCOM) beat numbers, guided up and its stock traded up 6.6% after hours. CVS Health (CVS) beat and raised, and its stock traded up 5.69% during the normal session. Marriott (MAR) was in line with earnings but beat on revenues and traded up 2.79%. Etsy (ETSY) posted strong numbers but cut guidance and the stock traded down 2.28%. Electronic Arts (EA) beat numbers, raised guidance and its stock rose 4.23%. Booking Holdings (BKNG) beat and its stock rose 4.32%. MGM Resorts (MGM) beat and traded up 3.08%. Hyatt Hotels (H) beat and traded up 1.5%.
Thursday – Dow (33) to 36,124, Nasdaq +128 to 15,940 (record close), S&P +19 to 4,680 (record close).
- Initial Jobless Claims were 269,000 (setting a new pandemic low) vs expectations of 275,000 and last week’s slightly revised higher print of 283,000.
- Six of the eleven S&P sectors traded positively today led by Technology, Consumer Discretionary and Industrials.
- Earnings: Moderna (MRNA) missed catastrophically and traded down 17.89%. Pinterest (PINS) beat and traded up 3.8% post close. Expedia (EXPE) crushed their numbers and traded up 12.06% in the extended session. Airbnb (ABNB) beat their numbers and traded up 1.15% post close. Uber (UBER) missed their numbers and traded down 2.01% post close. Square (SQ) missed and traded down 3.22%.
- The 10-year U.S. Treasury yield fell 6.5 bp to 1.522%.
Friday – Dow +203 to 36,327 (record close), Nasdaq +31 to 15,971 (record close), S&P +17 to 4,697 (record close).
- All three indices closed at record highs again on a great October jobs report and positive data from Pfizer’s (PFE) Covid-19 pill study.
- October Non-Farm Payrolls came in at 531,000 jobs added vs expectations of 450,000 and in stark relief to last month’s revised (higher from 191,000) 312,000 print.
- A drug study for Pfizer’s (PFE) antiviral Covid-19 pill was stopped after the drug was shown to cut the chances of hospitalization or death for at risk adults by 89%. The company said it would submit data from the pill to U.S. regulators by Thanksgiving.
- Ten of eleven S&P sectors traded positively today led by Energy, Industrials and Utilities.
- The 10-year U.S. Treasury yield fell nearly 7 bp to 1.451%.
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