No Sell November Remains Intact
The stock market’s November winning streak continues, with just two red days for the S&P 500 in the last three weeks. Meanwhile, investors are awaiting some key earnings during next week’s shortened holiday schedule. Let’s see what else you missed.
Today’s issue covers Nvidia nudging the Nasdaq 100, the season of sales slumps, and cocoa and orange juice futures continuing their trend.
Here’s today’s heat map:
6 of 11 sectors closed green. Energy (+2.10%) led, & technology (-0.21%) lagged.
U.S. single-family housing starts and building permits rose 0.2% and 0.5% in October, respectively. Multi-family starts and permits jumped 4.9% and 2.2%, as a tight supply of housing offsets builders’ fears of a looming recession.
Electric vehicle infrastructure company ChargePoint plummeted 35% to new all-time lows after pre-announcing that its third-quarter revenues would come in well below expectations. Additionally, it announced several executive shakeups, with unanticipated changes to its CEO and CFO.
Shares of the U.K. football club Manchester United jumped 8% on reports that British billionaire Jim Ratcliffe will acquire a 25% stake for roughly $33 per share. Last November, the club’s majority American owners, the Glazer family, said they were exploring “strategic alternatives” for the club, including a possible sale and fresh investment.
Shares of Twist Biosciences soared 26% after the synthetic DNA and DNA products manufacturer beat analyst’s fourth-quarter estimates and guided for sales to grow 16% to 18% in fiscal 2024.
The “Big Three” automakers rallied marginally after Stellantis and Ford workers joined their General Motors peers in ratifying the United Auto Workers (UAW) union contract.
And home products company Spectrum Brands dipped 12% after forecasting a YoY revenue decline for fiscal year 2024, while analysts expected a 1.5% gain.
$PLTR(+3.64%), $SAVE (+19.06%), $MSOS (+7.13%)
Here are the closing prices:
| S&P 500 | 4,514 | +0.13% |
| Nasdaq | 14,125 | +0.08% |
| Russell 2000 | 1,798 | +1.35% |
| Dow Jones | 34,947 | +0.01% |
A Season Of Sales Slumps
We’ve heard from many retailers this week, but BJ’s Wholesale topped things off before the bell.
The membership-based warehouse retailer’s third-quarter same-store sales came in lighter than expected. Excluding gasoline, comparable sales fell 0.1% YoY, with Wall Street looking for a 1% miss. It marks the company’s third straight quarter missing on this metric, with the company saying it’s seeing “shifts in consumer behavior” driven by the macroeconomic environment.
Total revenues grew 2.9% YoY, driven by a 2.8% increase in sales and a 6.6% increase in membership fee income. Overall, executives said the disinflationary trend led to lower prices and sales, even as store traffic increased. They also reiterated their fiscal 2023 adjusted earnings guidance of $3.80 to $3.92 per share.
However, its fourth-quarter same-store sales outlook of a 2% decline to a 1% increase was below expectations and caused it to lower its full-year guidance from about 2% to 1.0%-1.8%.
$BJ shares fell about 5% on the day, though sentiment continues to lean bullish on the streams.
As we’ve seen with other retailers, disinflationary pressures and a cautious consumer are expected to continue weighing on sales for the foreseeable future. Companies continue to focus on operational efficiency and cost cuts to buoy earnings as they await an uptick in consumer spending.
Nvidia Nudges The Nasdaq 100
The stock market has experienced a sharp run over the last three trading weeks, with just three down days for the Nasdaq 100. With the tech-heavy index pausing at its July peak, investors are looking for a catalyst to push it to new heights.
Well, the chart watchers say that Nvidia’s earnings on Tuesday after the bell will likely be the catalyst for the market’s next big move.
Below is a daily chart of Nvidia and the Nasdaq 100 ETF, which have behaved similarly since May. After popping on Monday, both of these charts have spent this week consolidating below their former highs as they await some potential news to entice new buyers.
It’s unclear what direction these consolidations will ultimately resolve. But given next week is likely to experience lighter trading volumes due to the holiday, Nvidia’s earnings on Tuesday evening are expected to have an outsized impact on the broader market for the rest of the week.
Cocoa and OJ Futures Keep On Rolling
It was a slow day out there, so we’re back with everyone’s favorite topic: commodity futures.
At the end of August, we discussed cocoa futures following in orange juice futures’ footsteps and breaking out to new all-time highs. Since then, weather conditions and crop outlooks have not improved, causing prices to rise even further.
Today, both commodities made new all-time closing highs. It shows that although the overall inflation theme has flipped, several markets are still experiencing massive moves due to their own independent issues.
Analysts are mixed on how high prices may go, but they tend to agree that a major supply/demand imbalance is taking place. Until that’s addressed, we may have to switch our breakfast items out for cheaper alternatives. 🤷
Bullets From The Day:
🏭 Eli Lilly to build its first plant in Germany as it struggles to meet soaring demand. The pharmaceutical giant is scrambling to meet demand for its new diabetes and obesity therapies, expanding its production by building a $2.5 billion plant in Germany. The new site will be operational beginning in 2027 and will play a vital role in bolstering Lilly’s incretin supply. The company and its Danish rival Novo Nordisk are leading the race to capture an estimated $100 billion future global market for anti-obesity treatments. Yahoo Finance has more.
⏸️ Cruise suspends employee stock program amid vehicle issues. The autonomous vehicle subsidiary of General Motors told staff its employee share-selling program is suspended, citing the need to reevaluate how to offer competitive compensation given its recent operational struggles. The recent loss to employees depends on when they started employment, but estimates are many have lost tens of thousands (if not hundreds) in the value of their equity packages. It will be a tough road to recovery if the company can’t get its employees long-term buy-in. More from TechCrunch.
❌ IBM delivers another blow to X after ads appeared near pro-Nazi content. Since the company decided to pull ads off the platform, several other organizations have followed suit, including Apple, Lionsgate, and The European Commission. The nonprofit Media Matters noted several large companies had their ads placed next to pro-Nazi and pro-Hitler posts. The situation is clearly going to impact CEO Linda Yaccarino’s plans to keep the platform’s biggest advertisers and users happy, though it remains to be seen how much. The Verge has more.
📉 Volvo Cars’ shares hit record low as Chinese backer trims stake. The Swedish automaker fell after its majority shareholder, China’s Geely, sold a small part of its stake (100 million shares) at a roughly 10% discount to recent closing prices. The sale brings its stake down to 78.70%, with the company saying it will increase the free float and further broaden the shareholder base. Meanwhile, Geely will use the funds to support the group’s business development. More from Reuters.
🏢 Amazon doubles down on its return-to-office mandate. Management told its employees that those who don’t return to the office will have difficulty getting promoted as they struggle to dial back the pandemic-era “work from home” trend. They’ve been trying to implement a hybrid model where employees must be in the office at least three days per week, with mixed success. Meanwhile, the company is also eliminating several hundred jobs in its Alexa division as it continues its cost-cutting. CNN Business has more.