Market Review: November 22, 2024

Closing Recap

Friday, November 22, 2024

Index

Up/Down

%

Last

DJ Industrials

426.04

0.97%

44,296

S&P 500

20.62

0.35%

5,969

Nasdaq

31.23

0.16%

19,003

Russell 2000

42.65

1.80%

2,406

 

 

 

 

 

 

 

 

 

After falling nearly every day of trading last week for the S&P 500, Nasdaq and Russell 2000, major averages finished higher nearly every day this week, as investors used last week’s pullback as another buying opportunity, with the biggest weekly winners being Smallcaps (+4.35%). All eleven S&P sectors finished the week with more than 1% gains, as the rally was broad based behind strong earnings in tech and retail (outside of TGT shares which tumbled on results). U.S. stocks weren’t the only asset class to rally this week as Gold prices jumped over 5% on geopolitical tensions and Bitcoin hit new highs around $100K late day up over 40% this month alone. The euro fell to the lowest level in two years as traders bet the European Central Bank will have to cut interest rates aggressively to bolster the region’s economy. The common currency fell more than 1% to $1.0335, the weakest since November 2022 after data Friday showed business activity in the bloc’s two biggest economies contracted more than expected. Is it a seasonality rally into year end? FOMO? YOLO? Irrational exuberance? market euphoria? AI hype? Whatever it is, stocks remain the place investors are flocking to, not far off record highs for the S&P, Nasdaq, heading into Thanksgiving Day holiday abbreviated week. The Dow Jones Industrials closed at record highs, Nasdaq above 19,000, Russell over 2,400! For the week, the S&P 500 gained 1.68%, the Nasdaq climbed 1.73%, Russell 2000 +4.3% and the Dow climbed 1.96%.

Economic Data

  • S&P Global November flash manufacturing PMI at 48.8 (vs 48.5 in October); S&P Global November flash services PMI at 57.0 (vs 55.0 in October) and S&P Global November flash composite PMI at 55.3 (vs 54.1 in October).
  • University of Michigan surveys of consumers 1-year inflation outlook final Nov 2.6% vs prelim 2.6% and final Oct 2.7% and University of Michigan surveys of consumers 5-year inflation outlook final Nov 3.2% vs prelim 3.1% and final Oct 3.0%.
  • University of Michigan surveys of consumers sentiment final Nov 71.8 (consensus 73.7) vs preliminary Nov 73.0 and final Oct 70.5, the current conditions index final Nov 63.9 vs prelim Nov 64.4 and final Oct 64.9, and the expectations index final Nov 76.9 vs prelim Nov 78.5 and final Oct 74.1.

Commodities

  • December gold prices rise $37.30 or 1.4% to settle at $2,712.20 an ounce, rising roughly 5.2% on the week despite a bounce in the dollar. Overall, gold, oil, and haven assets posted strong weekly gains after the Russia-Ukraine conflict escalated, while the dollar marched higher and poor economic data heaped pressure on the euro. WTI Crude oil futures rose $1.14 or 1.63% to settle at $71.24 per barrel while Brent gained $1.27 to $75.17.
  • Natural Gas prices slid after hitting the highest price in more than 1 year. CME issued a press release noting that Henry Hub Natural Gas options reached a single day volume record of 561,379 contracts on November 21, surpassing the previous record of 506,500 contracts traded on November 14, 2018. In addition to the single day options record, Thursday was also the highest volume day in 2024 for Natural Gas futures and options, reaching a combined 1,721,017 contracts traded.

Currencies & Treasuries

  • The U.S. dollar jumped, mostly against the euro which fell to a two-year low after weaker business activity in the euro zone contracted. S&P Global preliminary composite euro zone Purchasing Managers’ Index sank to a 10-month low of 48.1 in November, below the 50 level that marks expansion from contraction. Also, the UK’s PMI fell to 49.9 in November, from 51.8 in October. The dollar index (DXY) rose 0.42% to 107.51, with the euro dropping to lows of $1.0333, its lowest since Nov. 30, 2022. The greenback posted its third straight weekly advance.
  • Bitcoin continued its recent rally towards the $100,000 mark that has seen the cryptocurrency surge more than 40% since the U.S. election on expectations President-elect Donald Trump will loosen the regulatory environment for cryptocurrencies. Bitcoin hit highs above $99,400 and boosted several names/miners etc. related to crypto. MSTR shares jumped +13% around $450 after shares fell -16.16% on Thursday BUT still up around 32% on the week and 84% on the month; shares of COIN, MARA, IREN, and others all saw strength.
  • The two-year Treasury yield’s eight-week winning streak is the longest since 2022, but the 10-year falls; The 10-year loses 0.017 percentage point this week, to 4.409%, and the two-year gains 0.070 bps to 4.368%.

 

Macro

Up/Down

Last

WTI Crude

1.14

71.24

Brent

1.27

75.17

Gold

37.30

2,712.20

EUR/USD

-0.0054

1.0419

JPY/USD

0.29

154.79

10-Year Note

-0.02

4.412%

 

Sector News Breakdown

Retail, Consumer Staples & Restaurants:

  • GAP shares outperformed behind strong Q3 results as EPS of $0.72 topped est. $0.58 on sales $3.8B vs est. $3.812B, comps +1%, gross margin 42.7%; guides FY sales +1.5-2.0% vs prior up slightly and est. +0.45%, gr mgn approx +220bps, op exp approx $5.1B.
  • ROST delivered EPS ahead of consensus despite a modest shortfall on comps due to weather, some execution headwinds; Q3 EPS $1.48 vs est. $1.40 on sales $5.071B vs est. $5.146B, comps +1%; sees Q4 comps +2-3%, EPS $1.57-1.64 vs est. $1.67; sees FY EPS $6.10-6.17 vs est. $6.13; Q3 operating margin 11.9%, est. 11.2%.
  • GRAB double downgraded from Buy to Underperform at Bank America with $4.90 PT noting since Sept 1, Grab stock price is up 70% (vs Nasdaq up 5%), mainly on the back of good Q3 numbers, street’s improving comfort on Grab’s improving FCF profile and Fed rate cuts.
  • AMZN down for the 6th day in last 7 below $198 after hitting highs 52-week highs of $215.90 on 11/14.
  • CATO suspends regular quarterly dividends.
  • DECK topped its prior record high of $184.48 on June 3rd
  • PG shares rose an 8th straight day after investor day comments Thursday where the Co said it has been revamping its marketing and line-up of influencers on fast-growing Chinese shopping app Douyin in recent months.
  • TPR announces $2B accelerated share buyback plan.

Energy, Industrials and Materials

  • In Industrials: Keybanc with a few changes saying 3Q was characterized by mixed results and mgmt commentary focused on managing expectations for 4Q24 and early 2025. The firm said they are increasingly focused on higher-quality names with specific catalysts or secular themes. Keybanc upped their price tgt for AME to $215 (from $205), upgraded RBC from SW to OW with a $375 PT, and downgraded TKR to SW from OW. For the latter, this is a relative rather than negative call. Separately, FLS was upgraded from Sector Perform to Outperform at RBC Capital on a confluence of positives including eleven consecutive quarters of +$1B bookings, self-help 80/20 initiative and Product Excellence Program underpins targeted +300bps margin upside and improved FCF conversion and projected growth in nuclear (8%-10% of Q324 bookings) should benefit L-T from datacenter power demand. HON said it would sell its personal protective equipment business to Protective Industrial Products for about $1.33B.
  • In Defense: Truist lowered price tgts for CACI to $550 from $650, PSN to $110 from $130, LDOS 1o $185 from $205, BAH to $155 from $185, ICFI to $140 from $180 saying they still see headline risk as it relates to the Department of Government Efficiency (DOGE) and think a valuation floor could be another 10% below current levels. Strong fundamental results should continue in the near term with CY26E/27E most likely to see the potential effects of lingering uncertainty. KBR remains Truist’s favorite idea followed by CACI and AMTM.
  • In Aerospace: strong sector as LUNR shares rose after a nearly 16% jump on Thursday; Roth MKMK raised PT to $20 from $15 earlier. RKLB shares extend recent gains, now up about 140% in 5-weeks as Roth MKM raised its tgt to $30 from $25 today as believes the pending Neutron inaugural launch in mid-2025 will represent "a significant catalyst," particularly with the recent securing of the launch vehicle’s first lead customer contract.
  • In Metals & Mining: Gold prices managed a big jump despite a spike in the dollar, however prices for copper and aluminium fell after weaker euro zone business activity pressured the euro, and the dollar strengthened weighing on prices for industrial metals. The euro plunged to a two-year low after the data, and the U.S. dollar index hit a fresh two-year high. Note copper prices have fallen by 12% from a four-month peak hit on Sept. 30.

Financials

  • In FinTech: CFPB expands oversight of digital payments services including Apple Pay, Cash App, PayPal and Zelle (from yesterday). The Consumer Financial Protection Bureau on Thursday issued a finalized version of a rule saying it will soon supervise nonbank firms that offer financial services like payments and wallet apps (impacts shares of SQ, AAPL, PYPL, others). The CFPB said that seven nonbanks qualify for the new scrutiny. That would include payments services from Apple, Google and Amazon, as well as fintech firms, including PayPal and Block, and the peer-to-peer services Venmo and Zelle. ROOT downgraded to MP from Outperform after share outperformance; reaffirm Outperform for LMND and raise PT to $60 from $40; raise HIPO PT to $35 from $25 in FinTech at JMP.
  • Financial Services: INTU shares fell as reported a strong FQ1, outperforming across all key KPIs and while full-year guidance was reiterated, and customary post an FQ1, FQ2 was guided light of expectations on both the top and bottom line. RDDT shares dropped after Advance Magazine Publishers Inc., the arm of the Newhouse family publishing empire that owns Conde Nast, is offering 7.8 million shares for $145.38 to $148.54 each, which would be valued at as much as $1.2 billion. https://tinyurl.com/4xz55fxf

Biotech & Pharma:

  • ABBV upgraded from Market Perform to Outperform at Leerink as believes investors can take advantage of the emraclidine setback and election-related downdraft to purchase shares in this high-quality company.
  • HALO announced it has withdrawn its non-binding proposal to acquire EVO for €11.00 per share in cash, implying a fully diluted equity value of €2.0B.
  • MRNA shares jumped along with other vaccine names (BNTX, PFE, NVAX) as Jefferies, which hosted meeting w management, suggests the RFK Jr nomination as HHD director May have caused investor nervousness, but might not be as bad as believed; doesn’t believe RFK will take away vaccines
  • REPL announces FDA Breakthrough Therapy designation for RP1, submission of RP1 BLA under the accelerated approval pathway. The company also announced that the FDA has granted Breakthrough Therapy designation to RP1 in combination with nivolumab in the same setting.
  • VKTX was initiated at Buy and $109 tgt at B Riley based on its confidence in the long-term disruptive potential of lead program VK2735 in the fast-expanding obesity/type 2 diabetes (T2D)/metabolic dysfunction-associated steatohepatitis (MASH) landscape.

Healthcare Services & MedTech movers:

  • Hospital Operators: Raymond James downgraded several names, cutting CYH to Underperform from Market Perform without a price target, HCA to Market Perform from Outperform and THC to Outperform from Strong Buy as the firm expects a reduction in the Affordable Care Act exchange population in 2026 "due to the sunsetting of enhanced subsidies." There are growing investor concerns about several other risks, including the explosive growth in state-directed payments, risks to Medicaid and the potential re-emergence of the site neutral debate.
  • In Health Services: HIMS shares advanced late on Thursday after the release of a Joint Status Report that suggested persisting signs of shortages of Tirzepatide coupled with continued growth of production + demand of compounded versions of the drug

Technology

  • AAPL said on Friday it disagreed with findings by the British competition regulator that the U.S. tech giant could be holding back innovation in smartphone browsers. "We disagree with the findings in the report regarding Safari, WebKit, and in-app browsing on iOS," the company said in an emailed statement.
  • BIDU was downgraded to Equal Weight from Overweight at Barclay’s and cut tgt to $83 from $115 saying the move to generative artificial intelligence exacerbates the pressure on Baidu’s advertising. Persistently declining ads revenue is also likely to drive the company’s margins lower. (China US listed stocks down in general)
  • ESTC shares surged after reported Q2 results that were above revenue estimates at 18% Y/Y growth (17% in CC), with Elastic Cloud growing at 25% Y/Y, including some larger customers that grew consumption better than plan; also increased its Q3 and FY25 revenue growth outlook by ~1% and sees FY25 op margins 14% (was 12.5%).
  • GOOGL shares fell a second day after the Information reported that OpenAI is considering developing a web browser and recently struck deals to power search features for retail, travel and other websites.
  • NFLX had a strong week rising roughly 9%, benefiting from the company’s boxing match between Mike Tyson and Jake Paul last weekend.
  • NTAP delivered a modest beat to Q2 and raised full-year guidance, supported by strength in All-Flash-Array sales (ARR +19% YoY to $3.8B); raised FY25 adj EPS to $7.20-$7.40 from prior $7.00-$7.20 (est. $7.11), revs to $6.54B-$6.74B from $6.48B-$6.68B and also guides adj operating margin to 28% to 28.5%, from prior 27% to 28% (shares opened higher but reversed after the open to finish lower)

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.