Market Overview
The stock market experienced a pause following a strong performance since last week's election results. Although there were losses, they were relatively minor compared to the gains since last Tuesday's close. The Russell 2000 index fell by 1.8% today, yet it remains up by 5.8% since the election. This decline was driven by profit-taking and rising market rates, with the 10-year yield increasing by 12 basis points to 4.43%, and the 2-year yield rising by nine basis points to 4.34%.
Sector Performance
There was broad selling interest across many stocks, leading to declines. The Invesco S&P 500 Equal Weight ETF (RSP) dropped by 0.8%, and nine S&P 500 sectors recorded losses. The consumer discretionary sector was among the hardest hit, falling by 1.1%, with notable losses in Tesla (TSLA, Financial) at $328.49, down 6.2%, and Home Depot (HD, Financial) at $403.08, down 1.3%. TSLA shares were affected by consolidation efforts, while HD shares reacted to earnings news.
Mega Cap Support
Despite the overall downturn, gains in some mega-cap stocks provided some support to the broader equity market. Microsoft (MSFT) rose to $423.03, up 1.2%, and NVIDIA (NVDA, Financial) increased to $148.29, up 2.1%, standing out as significant performers.
Economic Indicators
The New York Fed released its Survey of Consumer Expectations for October, which had a muted impact on equities. The survey indicated that year-ahead inflation expectations decreased to 2.9% from 3.0%, the three-year outlook fell to 2.5% from 2.7%, and the five-year expectations dipped to 2.8% from 2.9%.
Upcoming Economic Data
Today's economic data included the NFIB Small Business Optimism survey, which increased to 93.7 in October from 91.5 in September. Looking ahead, Wednesday's calendar includes the October Consumer Price Index and core-Consumer Price Index, scheduled for release at 8:30 ET.
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Today's News
Amazon Web Services (AMZN, Financial) is reportedly negotiating a $475 million agreement to provide Nvidia (NVDA, Financial) processors for IBM's (IBM, Financial) AI training via the cloud. This deal would enable IBM to use AWS's EC2 servers equipped with Nvidia's GPUs, showcasing the rising demand for Nvidia's technology. This collaboration is expected to enhance AI solutions for their shared customers, building on IBM's earlier integration of its AI platform with Amazon SageMaker.
Rocket Lab USA (RKLB) reported a Q3 GAAP EPS of -$0.10, surpassing expectations by $0.01. The company achieved a revenue of $104.81 million, marking a 54.9% year-over-year increase, which exceeded forecasts by $2.42 million. Rocket Lab's optimistic Q4 outlook projects revenue between $125 million and $135 million, with shares rising by 9.48% following the announcement.
Occidental Petroleum (OXY, Financial) outperformed expectations with a Q3 Non-GAAP EPS of $1.00, beating estimates by $0.25. The company's strong operational performance generated an operating cash flow of $3.8 billion. Occidental also repaid $4 billion in debt, achieving nearly 90% of its short-term debt reduction target, leading to a slight increase in shares by 0.84%.
Home Depot (HD, Financial) saw a slight decline in its stock price after the company's earnings call, despite exceeding Q3 earnings expectations. CEO Ted Decker noted that high interest rates are impacting consumer spending on home improvement projects. Analysts observed improvements in transaction numbers and cost leverage, though macroeconomic conditions will likely influence future estimates.
SoundHound AI (SOUN, Financial) posted a Q3 Non-GAAP EPS of -$0.04, beating estimates by $0.03, with revenue reaching $25.09 million, an 88.6% increase year-over-year. The company updated its revenue outlook for 2024 and 2025, with shares falling slightly by 1.06% after the announcement.
Amgen (AMGN, Financial) shares declined after Cantor Fitzgerald highlighted potential safety concerns with its obesity drug candidate MariTide (AMG-133), linked to a loss in bone mineral density. Despite these concerns, the analyst maintained an overweight recommendation with a $405 target price, citing the drug's potential to challenge existing market leaders.
Sea Ltd. (SE, Financial) experienced a surge in stock price by up to 20.6% following its Q3 earnings report, which showed a 31% increase in revenue to $4.3 billion. This growth was driven by all business segments, particularly the e-commerce platform Shopee. The company remains on track to meet its annual guidance, with significant growth in its SeaMoney loan book and Free Fire bookings.
ARK Innovation ETF (ARKK) has reached its highest trading level in over two years, gaining 23.7% in November. Despite this rise, the ETF remains significantly below its all-time high. The fund's top holdings include Tesla (TSLA, Financial), Coinbase Global (COIN, Financial), and Roku (ROKU, Financial), indicating strong interest in growth stocks.
Mosaic (MOS) saw a 9.2% drop in stock price after reporting lower-than-expected Q3 earnings and revenues. The company's performance was affected by hurricanes in Florida, which disrupted phosphate production and lowered selling prices. However, Mosaic's phosphate production has resumed full capacity, with expectations to meet its annual run rate.
CAVA Group (CAVA) reported a 39% increase in revenue for FQ3, driven by new restaurant openings and same-restaurant sales growth. The company's restaurant-level profit margin improved to 25.6%, with net income rising to $18 million. CAVA's stock surged by 13.07% following the earnings report.
GE Vernova (GEV) shares fell by 7.5% as CEO Scott Strazik announced a pause on new offshore wind turbine projects, awaiting better market conditions. The company holds a $3 billion backlog of orders, with current projects extending over two years, despite challenges posed by political changes.
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