Stocks rallied Friday, led by technology and communication services, but the major averages finished lower for the week on escalating inflation fears. The October consumer price index, released Wednesday, showed inflation running hotter than at any time in 30 years. The major averages ended the week with modest losses of less than 1%, but all remain within striking distance of their all-time highs.
Top sectors last week:
- S&P 500 Materials Sector +2.51% (ETF: XLB)
- S&P 500 Health Care Sector +0.61% (ETF: XLV)
- S&P 500 Industrials Sector +0.4% (ETF: XLI)
Top news last week:
- Company breakups: During the last week 2 huge conglomerates, General Electric and Johnson & Johnson, have announced that they are breaking up their businesses into several parts. Unveiling one of the biggest changes in the industrial giant's history, General Electric (GE) announced plans on Tuesday to split into three global public companies with the following focuses: Aviation, Healthcare and Renewable Energy and Power. "By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees," CEO of General Electric Larry Culp said in a statement. Shares of GE shoot up almost 6% after the announcement but are now down 1.7% during the week.
- By the end of the week, Johnson & Johnson also announced plans to split its consumer health division from the rest of the firm. The split will create one of the world’s larger consumer healthcare companies, while the stay-behind company will still be the largest healthcare company in the world. The consumer health division - which the company expects to generate $15 billion in revenue this year -- will include products like Band-Aid, Tylenol, and Listerine. It will become a new publicly traded company. The company expects the remaining pharmaceutical and medical devices divisions to generate $77 billion in revenue this year. Shares of JNJ are up just 0.8% during the week.
- Streaming services are slowing down: Walt Disney shares are down almost 9% after the disappointing earnings call. Subscription growth for Disney+, its flagship streaming service, slowed in the latest quarter, fueling fears that the days of fast subscriber growth have ended. Only 2.1M subscribers were added during the fiscal fourth quarter, down from the 12.6M new subs notched in FQ3. Slowing growth among rival streaming services like HBO Max, Paramount+ and Peacock suggests strong pandemic gains are disappearing as more people seek entertainment outside the house. Only Netflix bounced back this quarter, reporting 4.4 million subscriber net additions. NFLX stock is up almost 5% from the beginning of this week.
- Largest IPO of the year: The next EV maker to hit the public markets made an electrifying debut. Rivian Automotive (RIVN) priced its IPO at $78/share, above an already-elevated range of $72 to $74, raising a whopping $11.9B for the biggest share sale of 2021. The stock finished its first session up 28% at $100 and continued climbing for the rest of the week reaching $130 at the market close on Friday. Market capitalization of RIVN has reached whooping 110 billion, which makes it larger than Ford, Lucid group, Nio and a lot of other popular companies in EV space. Rivian outlined its ecosystem in advance of the IPO, which includes vehicle technology, the Rivian Cloud, product development, analytics, accessories and services. The ecosystem, which also details plans for a charging network, is described as competitive in comparison to peers. Rivian estimates its total addressable market at $9T, and its serviceable available market at $1T.
The Calendar:
Monday, November 15: Tyson Foods (TSN), Warner Music Group (WMG), Super League Gaming (SLGG) and Advance Auto Parts (AAP).
Tuesday, November 16: Walmart (WMT), Home Depot (HD), NetEase (NTES) and Dolby Labs (DLB).
Wednesday, November 17: Baidu (BIDU), Target (TGT), Lowe's (LOW), TJX Companies (TJX), Nvidia (NVDA) and Weber (WEBR).
Thursday, November 18: JD.com (JD), Alibaba (BABA), Macy's (M), Kohl's (KSS), Workday (WDAY), Applied Materials (AMAT) and Palo Alto Networks (PANW).
Friday, November 19: Foot Locker (FL).
IPO’s This week:
IPOs set to start trading next week include Braze (BRZE), UserTesting (USER), Iris Energy (IREN), Sono Group (SEV) on November 17, as well as KC Holdco (KLC) and Sweetgreen (SG) on November 18. Of the bunch, Sono Group is capturing the most attention. The parent company for Sono Motors describes itself as being on a pioneering mission to accelerate the revolution of mobility by making every vehicle solar. The company's Sion solar electric vehicle is expected to be the first of its kind and more than 16K reservations with advance payments have been made. The vehicle will be produced through contract manufacturing with customer deliveries expected to begin in the first half of 2023. Sono Motors (SEV) believes that SEVs will be the next big wave in e-mobility and calls combustion engines a thing of the past. The company wants to take the solar concept to trucks, trailers and buses.
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