U.S. stock market reached another round of record highs on Friday, as investors were not scared by disappointing quarterly results from Apple and Amazon. Both companies missed revenue estimates for the latest quarter and issued cautious guidance due to persisting supply chain problems. On the economic front, the U.S. economy was reported to have grown at a 2% annualized GDP pace in the third quarter to mark the slowest rate of increase in more than a year. But despite the Big Tech and GDP disappointments, stocks have been setting records, as more than 80% of companies on the S&P 500 reporting earnings so far have beaten estimates from Wall Street analysts. All three major market indexes finished higher for the fourth straight week. During October Nasdaq jumped 7.2%, while the S&P surged 6.9% and the Dow climbed 5.8%, which were biggest monthly gains since March.
Top Sectors last month:
- S&P 500 Consumer Discretionary Sector (ETF: XLY) up 11.26%
- S&P 500 Energy Sector (ETF: XLE) up 6.74%
- S&P 500 Technology Sector (ETF: XLK) up 6.57%
Interesting News:
- Microsoft becomes world’s most valuable company: Microsoft passed Apple in market cap on Friday, making it the world’s most valuable publicly traded company. Microsoft's shift toward more cloud-based software and services continued to pay off for the software giant and led it to report strong quarterly numbers. MSFT reported revenue of $45.3 billion and a net income of $20.5 billion (GAAP). Revenue is up 22 percent, and net income has increased by 48 percent. Microsoft has seen strong revenue performance in its cloud, server, and Office businesses this quarter. Nearly every analyst following Microsoft raised their estimates and target prices. Microsoft is also expected to grow faster than Apple. The average estimate is 14.2% revenue gains for fiscal year 2022 and 13.1% for 2023. Apple revenue gains, on the other hand, are expected to slow to 4% next year from 33% in fiscal 2021.
- Google Nearly Doubles Profit: Google parent company Alphabet (GOOG, GOOGL) shattered expectations on Tuesday with Q3 results that showed the biggest quarterly revenue gain in 14 years. The figure rose more than 40% Y/Y (or 39% in constant currency) to over $65B amid stronger-than-expected advertising revenues. The search giant appears to be cashing in on a rebound in search traffic, especially with keywords related to travel and retail trends that are picking up globally. The shares were up 7.62% during the last week.
- Retail Sales Forecast to Be Highest Ever This Holiday Season: It’s shaping up to be the best holiday season ever for retailers, with the National Retail Federation predicting sales will rise as much as 10.5%, to $859 billion, between Nov. 1 and Dec. 31, beating last year’s record as shoppers return to malls and stores. Retailers could hire up to 665,000 seasonal workers this year, from store positions to warehouse fulfillment jobs, compared with 486,000 workers in 2020, NRF said. Some stocks that can potentially benefit from this trend include: Amazon (AMZN), Lululemon (LULU), Target (TGT), Apple (AAPL). Investors can also look into following ETF’s: Amplify Online Retail ETF (IBUY), Global X E-commerce ETF (EBIZ), ProShares Online Retail ETF (ONLN).
Calendar:
Investors have big meetings with the Federal Reserve and OPEC to track even as earnings reports continue to roll in. The Fed is expected to make an announcement of a reduction of its monthly purchases of Treasuries and mortgage-backed securities. The Fed's stance on "transitory" inflation will also be crucial. Economic reports due in next week include updates on construction spending, factory orders and the latest jobs report. Nonfarm payroll growth is expected to improve dramatically from the August and September levels when the much higher rate of COVID hospitalizations in the U.S. detracted the recovery.
Earnings this week:
Monday, November 1: On Semiconductor (ON), NXP Semi (NXPI), McKesson (MCK), AMC Entertainment (AMC) and Avis Budget Group (CAR) and Clorox (CLX).
Tuesday, November 2: BP (BP), Pfizer (PFE), Under Armour (UAA), Marathon Petroleum (MPC), Ralph Lauren (RL), T-Mobile (TMUS), Mondelez International (MDLZ), Match Group (MTCH), Lyft (LYFT) and Activision Blizzard (ATVI).
Wednesday, November 3: CVS Health (CVS), Humana (HUM), Marriott International (MAR), Metlife (MET), Qualcomm (QCOM), Electronic Arts (EA), Take-Two Interactive (TTWO) and Roku (ROKU).
Thursday, November 4: Cigna (CI), Wayfair (W), Penn National Gaming (PENN), Uber (UBER), Airbnb (ABNB), News Corp (NWSA), Pinterest (PINS), Dropbox (DBX), Expedia (EXPE), Square (SQ) and Rocket Companies (RKT).
Friday, November 5: DraftKings (DKNG), Magna International (MGA), Cinemark (CNK), Canopy Growth (CGC) and AMC Networks (AMCX).
IPOs this week:
IPOs expected to price include during the week include Sharethrough on November 1 and Allbirds (BIRD) on November 3. There could also be some action on the upcoming NerdWallet (NRDS) and Arhaus (ARHS) IPOs.
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