Market Performance
The stock market opened the holiday-shortened week on a positive note, buoyed by President-elect Trump's nomination of Scott Bessent for Treasury Secretary. The Dow Jones Industrial Average rose by 1.0%, while the Russell 2000 and S&P Mid Cap 400 both gained 1.5%. In contrast, the S&P 500 and Nasdaq Composite saw smaller increases of 0.3% each.
Sector Rotation
The relative underperformance of the S&P 500 and Nasdaq Composite was due to some rotation out of major stocks with significant gains this year. Notably, NVIDIA (NVDA) decreased by 4.2%, though it remains 174.7% higher for the year. Tesla (TSLA, Financial) also fell by 4.0%, yet it is up 36.3% in 2024.
Treasury Secretary Nomination
Scott Bessent's nomination is viewed as "market-friendly" because of his hedge fund background. This has contributed to a positive sentiment in the equity market. According to The Wall Street Journal, Bessent aims to prioritize the Trump administration's tax-cut proposals.
Bond Market Reaction
The bond market rallied on optimism that Bessent would focus on tax cuts, reducing the national debt, and cutting the budget deficit to 3% of GDP. He is also expected to advocate for a gradual approach to tariffs to avoid inflation. The 10-year yield dropped 15 basis points to 4.27%, and the 2-year yield fell by ten basis points to 4.27%. The U.S. Treasury successfully auctioned $69 billion in 2-year notes.
S&P 500 Sector Performance
The broad market rally led nine of the S&P 500 sectors higher, with real estate leading the way at a 1.3% increase, responding to lower rates. The consumer discretionary sector followed, gaining 1.0%. However, the energy sector lagged, dropping 2.0% as oil prices fell due to potential ceasefire news between Israel and Hezbollah. WTI crude futures settled 3.3% lower at $68.93 per barrel.
Upcoming Economic Data
No significant U.S. economic data was released. Looking ahead, Tuesday's economic calendar will include the September FHFA Housing Price Index and the September S&P Case-Shiller Home Price Index, as well as November's Consumer Confidence and October's New Home Sales figures.
Global Market Overview
In international markets, Europe saw mixed results with the DAX up 0.5%, the FTSE increasing by 0.4%, and the CAC unchanged. In Asia, the Nikkei rose 1.1%, while the Hang Seng and Shanghai indices fell by 0.4% and 0.1%, respectively.
Guru Stock Picks
Bill Nygren has made the following transactions:
Today's News
Comcast (CMCSA, Financial) is reportedly finalizing a new multi-million dollar deal to broadcast the Macy's (M, Financial) Thanksgiving parade on its network and Peacock streaming service for at least the next decade. The new agreement, expected to start next year, would significantly increase the annual fee from the current $20 million to over $60 million. This deal also includes other Macy's-branded events, such as the July 4 fireworks, with NBCUniversal Media Group Chairman Mark Lazarus playing a key role in the negotiations.
Blue Bird Corporation (BLBD, Financial) exceeded expectations with its Q4 Non-GAAP EPS of $0.77 and revenue of $350.2 million, marking a 15.6% year-over-year increase. The company has revised its fiscal 2025 guidance upwards, projecting net revenue between $1.4 and $1.5 billion and adjusted EBITDA between $190 and $210 million. Blue Bird is also optimistic about its long-term profit outlook, aiming for an adjusted EBITDA margin of over 15% on approximately $2 billion in revenue.
Shares of Quantum Computing (QUBT, Financial) surged about 13% following a recent order for its photonic chip and the launch of Amazon Web Services' Quantum Embark program. The company's stock has been volatile, experiencing significant gains and losses, but continues to gain momentum with the AWS partnership announcement.
Enterprise Products Partners L.P. (EPD, Financial) saw a slight dip of 1.5% after seven consecutive sessions of gains. The stock has risen over 25% this year, aligning with the broader S&P 500 Index. Analysts maintain a positive outlook with a Buy rating, highlighting the company's profitability and momentum.
SoFi Technologies (SOFI, Financial) extended its rally, closing 0.64% higher, marking a 14% gain over the past six sessions. The fintech company has raised its full-year guidance for GAAP EPS and adjusted net revenue, outperforming the S&P 500 Index with a 59% increase this year. Wall Street analysts are mixed, with a majority rating the stock as a Hold.
Defense contractors are gaining attention as analysts at Bernstein predict a strong defense focus with President-elect Donald Trump's return. Despite concerns over potential cost-cutting by a new Department of Government Efficiency, U.S. defense stocks are expected to benefit from an emphasis on nuclear deterrence and space capabilities.
Guardant Health (GH, Financial) shares rose 9.5% after a jury awarded the company $292.5 million in a false advertising lawsuit against Natera (NTRA, Financial). The lawsuit addressed misleading claims made by Natera about Guardant's Reveal oncology test. Natera plans to challenge the jury's decision.
Macerich (MAC, Financial) announced an underwritten public offering of 18 million shares to repay a $478 million mortgage loan. The stock fell 1.89% after hours, with the offering expected to provide financial flexibility amid ongoing strategic initiatives.
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