Stocks closed the week in red but managed to limit some damage with last-hour buying. The NASDAQ (COMP.IND) indexed declined -2.62% over the week, while the S&P (SP500) and Dow (DJI) were down -1.22% and -0.91% respectively, in the same period, notably this is the second-straight losing week for the S&P and NASDAQ. The Dow Industrials have been down four weeks in a row. Last week, US treasury yields tumbled, with the 10-year Treasury yield falling by 10 basis points to 1.35%.
The U.S. added 210,000 jobs during November, well short of the 535,000 expected by economists polled by FactSet. While the headline figure came in below expectations, labor force participation rose slightly, up from 61.6% to 61.8%. Notably, this is the first time the figure has broken above 61.7% level since the pandemic lockdowns began to unwind.
Top sectors last week:
- S&P 500 Information technology sector up 1.23% (ETF: XLK)
- S&P 500 Utilities sector up 0.97% (ETF: XLU)
- S&P 500 Real estate sector up 0.07% (ETF: XLRE)
Top news last week:
- Jerome Powell retires the word “transitory”: After spending months arguing that the surge in pandemic inflation was largely due to "transitory" forces, Fed Chair Jerome Powell told Congress on Tuesday that it's "probably a good time to retire that word." As a result of the price pressures, the Fed is now considering a faster tapering to its asset purchase program, shifting gears to tighter monetary policy. Doing so would also put the Fed on a path to begin raising its key short-term rate as early as the first half of 2022. During high inflation periods growths stocks tend to lag behind the market, however according to experts, companies that do well during inflation are dividend-paying, stable businesses in the value sector. Pricing power and global market reach are also factors that investors should consider. Warren Buffett has also mentioned on several occasions that real estate is a handy investment during high inflation times. According to one of the latest articles on yahoo finance some of the top inflation-proof stocks to buy now include Apple Inc. (AAPL), Adobe Inc. (ADBE), MercadoLibre, Inc. (MELI), and Federal Realty Investment Trust (FRT).
- DocuSign plunged more than 40% after the company issued weak 4Q guidance: DocuSign shares plummeted by more than 40% in extended trading on Thursday after the developer of e-signature software provided a forecast for the end of the year that missed analysts’ estimates. Fourth-quarter revenue will come in at between $557mn and $563mn, DocuSign said in its earnings report for the third quarter, while analysts were expecting revenue to stand at $573.8mn, according to Refinitiv. This might be the sign that investors are worried about stocks that grew rapidly during the pandemic, and don’t believe that these companies can sustain the same level of high growth. Some other high-growth stocks that plummeted during the last month include Upstart Holdings (UPST) down 48.25%, Crowdstrike Holdings Inc (CRWD) down 27.93% and Affirm Holdings Inc (AFRM) down 34.70%. However, for the investors that believe that these companies can keep up with the high growth expectations in the future, this might be a good time to grab some of those discounted shares.
- Didi’s dramatic delisting rings alarm bells for alibaba and others: Didi Global’s U.S. listing will surely go down as one of the most ill-fated in history. The Chinese ride-hailing giant said Friday it plans to delist from the New York Stock Exchange and prepare for a listing in Hong Kong. It was only five months ago that the company raised $4.4 billion in its U.S. IPO. DIDI stock is down more than 50% from its IPO price. There is also more pressure coming from Chinese regulators, who are reportedly planning to ban companies going public on foreign exchanges through the controversial variable interest entity structure—used by the likes of Alibaba, JD.com, NIO, and XPeng to list in the U.S.
Calendar:
The week ahead could see some more cautious risk-off trading with the consumer price index report arriving on Friday just five days before Federal Reserve policymakers meet to discuss inflation risks. Analysts expect the headline CPI number to reach 6.7%, which would be the highest rate since 1982. An even higher rate could rattle investors further and reset central bank expectations.
Earnings this week:
Monday, December 6: Coupa Software (COUP) and MongoDB (MDB).
Tuesday, December 7: AutoZone (AZO), ChargePoint Holdings (CHPT), Toll Brothers (TOL), Stitch Fix (SFIX), and Dave & Buster's Entertainment (PLAY).
Wednesday, December 8: Campbell Soup (CPB), GameStop (GME), RH (RH), and Torrid Holdings (CURV).
Thursday, December 9: Broadcom (AVGO), Chewy (CHWY), Costco (COST), Oracle (ORCL), and Lululemon (LULU) .
Friday, December 10: Academy Sports + Outdoors (ASO).
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