Market Snapshot
| Dow | 43988.99 | +259.65 | (0.59%) | | Nasdaq | 19286.77 | +17.32 | (0.09%) | | SP 500 | 5995.55 | +22.44 | (0.38%) | | 10-yr Note | +3/32 | 4.31 |
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| | NYSE | Adv 1704 | Dec 1028 | Vol 1.0 bln | | Nasdaq | Adv 2377 | Dec 1883 | Vol 7.3 bln |
Industry Watch
| Strong: Real Estate, Utilities, Consumer Staples, Consumer Discretionary, Industrials |
| | Weak: Materials, Communication Services, Information Technology |
Moving the Market
-- Mixed disposition after big run in stocks this week
-- Weakness in chipmakers weighing down major indices
-- Losses in mega caps also weighing on index performance
-- Digesting big batch of earnings news
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Closing Summary
08-Nov-24 16:30 ET
Dow +259.65 at 43988.99, Nasdaq +17.32 at 19286.77, S&P +22.44 at 5995.55
[BRIEFING.COM] The stock market closed this huge week on an upbeat note. The S&P 500 (+0.4%) traded above 6,000 for the first time and the Dow Jones Industrial Average (+0.6%) traded above the 44,000 mark for the first time before settling off session highs.
The S&P 500 and Nasdaq Composite are 25.7% and 28.5% higher, respectively, in 2024. The Russell 2000 is nearly 20% higher this year following this week's 9.2% surge.
The Nasdaq Composite settled little changed from yesterday, weighed down by losses in some mega cap names. NVIDIA (NVDA 147.63, -1.25, -0.8%) which started trading as a Dow Jones Industrial Average component today, was a standout in that respect. The other $3 trillion companies in terms of market cap -- Apple (AAPL 226.96, -0.27, -0.1%) and Microsoft (MSFT 422.54, -2.89, -0.7%) -- also closed lower.
Tesla (TSLA 231.22, +24.31, +8.2%) did not struggle under selling pressure like other mega caps. Shares settled the week nearly 30% higher.
The price action in Tesla contributed to the move in the S&P 500 consumer discretionary sector (+1.2%). Five of the 11 sectors closed at least 1.0% higher. The rate-sensitive real estate (+1.7%) and utilities sector (+1.8%) responded favorably to a drop in the 10-yr yield.
Meanwhile, the materials sector logged the largest decline, down 0.9%.
The 10-yr yield dropped four basis points today to 4.31%.
- Nasdaq Composite: +28.5%
- S&P 500: +25.7%
- S&P Midcap 400: +18.5%
- Dow Jones Industrial Average: +16.7%
- Russell 2000: +18.4%
Reviewing today's economic data:
- November Univ. of Michigan Consumer Sentiment - Prelim 73.0 (Briefing.com consensus 70.6); Prior 70.5
- The key takeaway from the report is that the responses were tabulated before the election results and reveal that consumers were already feeling more upbeat about their income prospects and short-run business conditions.
Looking ahead to Monday, the bond market is closed for Veterans Day. The NYSE is still open.
Treasuries settle mixed after busy week
08-Nov-24 15:35 ET
Dow +275.47 at 44004.81, Nasdaq +3.30 at 19272.75, S&P +23.63 at 5996.74
[BRIEFING.COM] The S&P 500 declined slightly over the last half hour, still trading 0.4% higher than yesterday.
Treasuries settled mixed after a busy week that featured the release of a big batch of quarterly results, another rate cut from the FOMC, the outcome of congressional and presidential elections, underwhelming stimulus news from China, and growing political uncertainty in Germany and Japan. The 10-yr yield dropped four basis points today, and five basis points this week, to 4.31%. The 2-yr yield settled three basis points higher today, and five basis points higher this week, at 4.25%.
Looking ahead to Monday, the bond market is closed for Veterans Day.
Stocks trade near highs ahead of the close
08-Nov-24 15:05 ET
Dow +344.41 at 44073.75, Nasdaq +21.01 at 19290.46, S&P +30.90 at 6004.01
[BRIEFING.COM] The major indices trade at or near session highs with gains ranging from 0.2% to 0.9%.
Mega cap stocks continue to trade lower as money rotates to other areas of the market. The equal-weighted S&P 500 trades 0.7% higher, bringing its gain this week to 4.5%. Meanwhile, Tesla (TSLA 323.16, +26.25, +8.8%) has built on its huge gain this week. Shares are up almost 9% today, bringing its gain this week to 30.0%.
Advancers lead decliners by a 3-to-2 margin at the NYSE and by an 11-to-10 margin at the Nasdaq.
Axon, Insulet among top S&P 500 gainers on Friday post earnings
08-Nov-24 14:30 ET
Dow +355.34 at 44084.68, Nasdaq +36.94 at 19306.39, S&P +34.83 at 6007.94
[BRIEFING.COM] The S&P 500 (+0.58%) is in second place on Friday afternoon, now just a hair off session highs.
Elsewhere, S&P 500 constituents Axon (AXON 609.40, +140.65, +30.01%), Insulet (PODD 271.98, +27.00, +11.02%), and Motorola Solutions (MSI 502.51, +32.56, +6.93%) dot the top of the standings following earnings.
Meanwhile, Akamai Tech (AKAM 90.21, -14.19, -13.59%) is today's top laggard following earnings.
Gold extends weekly losses on Friday amid dollar surge
08-Nov-24 14:00 ET
Market is Closed
[BRIEFING.COM] The Nasdaq Composite (+0.11%) lags its counterparts with two hours to go on Friday, poised to end the week +5.8% higher.
Gold futures settled $11.00 lower (-0.4%) to $2,694.80/oz, down then -2% on the week, pressured as the dollar pushed higher in the wake of the results from this week's Presidential election.
Meanwhile, the U.S. Dollar Index is up about +0.6% to $105.11.
The Trade Desk encounters profit-taking over a projected minor slowdown in Q4 revenue growth (TTD)
After gapping to all-time highs yesterday, investors are securing some profits today following The Trade Desk's (TTD -5%) upbeat Q3 report. The online ad-buying platform surpassed analyst earnings and sales expectations and issued energetic Q4 revenue guidance, all reflecting healthy ad buying throughout the quarter. The headliner remained CTV, or Connected TV, which includes smart TVs, streaming devices, and many other electronics connected to the internet. TTD is excited over the secular shift toward CTV and the outsized growth potential it offers.
So why are shares encountering selling pressure today? Valuation is an underlying factor. TTD reached a forward earnings multiple of 72x yesterday, placing it in priced-to-perfection territory. As a result, TTD's Q3 report was placed under a microscope, which revealed a few minor blemishes. For instance, the company's earnings beat was a penny below its Q2 upside. Additionally, and more importantly, TTD's Q4 revenue guidance of at least $756 mln translates to +25% yr/yr growth, a slight slowdown from the +27% delivered in Q3. Management expressed cautious optimism about Q4, encouraged by its current momentum, but concerned that some brands are not overly interested in advertising during a polarized political landscape, creating a different dynamic in 4Q24 compared to past fourth quarters.
Despite these nitpickings, TTD's Q3 report carried over many uplifting trends seen throughout this year.
- CTV remains TTD's fastest-growing channel and shows no signs of slowing. The company's partners, like Disney, Walmart, Roku, and Netflix, are strengthening their ties with TTD due to an expanding CTV opportunity. Legacy cable continues to fade while streaming services are constantly gaining momentum, a trend that should propel CTV-related gains even higher over the long term.
- A sturdy support beam for CTV is ad-supported streaming. Companies like Netflix (NFLX) and Amazon (AMZN) have launched ad-supported video streaming in recent years to attract more eyes and extract more revenue. NFLX mentioned last month that its ad-tier plan accounted for over half of its sign-ups in countries where it is offered, boasting a 35% jump in membership sequentially. Meanwhile, AMZN noted last week that Prime Video ads have been a recent growth area.
- Overall advertising was healthy during Q3. TTD commented that most of its verticals exhibited strength, particularly medical health, home and garden, and pets. Political spending was also strong in Q3, as expected. International spending growth outstripped North America for the seventh consecutive quarter in Q3. However, international spending represents only around 12% of TTD's total revenue, with North America comprising the remainder. Still, TTD sees meaningful growth opportunities across the EMEA and Asia Pacific.
TTD delivered a solid Q3 report that gave investors little to complain about. CTV continues to carve out additional growth opportunities for the company while overseas markets offer further upside potential. However, following such a sizeable gap-up yesterday, an over +100% improvement over January lows that gave TTD a frothy valuation, the market is not overly thrilled by TTD's cautious optimism surrounding Q4, spurring a sell-the-news reaction today.
Pinterest tacking on some big losses following Q3 results as slowing growth spooks investors (PINS)
After Meta Platforms (META), Alphabet (GOOG), and Snap (SNAP) delivered better-than-expected quarterly results, the bar was reset a little higher heading into Pinterests' (PINS) Q3 earnings report, as reflected in the stock's near 7% gain over the past week. While PINS did beat EPS expectations for the ninth quarter in a row, revenue was merely in line with the consensus estimate and its Q4 revenue guidance also failed to impress investors who were looking for more.
- At the midpoint of that Q4 outlook, which calls for revenue of $1.125-$1.145 bln, PINS' topline growth would continue its downward trend, sliding from nearly 23% in 1Q24, to 21% in Q2, 18% this quarter, and finally, to 16% next quarter.
- As PINS' growth is slowing, the company is ramping up its AI investments in order to keep pace with larger competitors like META and SNAP. Marketers are seeking better ROIs through more targeted ads, and META has become a preferred destination in that regard due to its AI capabilities that identify and match likely buyers on its platform with advertisers' products. PINS has lost some ground and its increasing spending in order to improve its competitiveness.
- In Q3, total costs and expenses jumped by about 18% yr/yr to $904.3 mln, which was well above analysts' expectations. For Q4, PINS is targeting operating expenses of $495-$510 mln, representing a yr/yr increase of 11-14%.
- AI is already playing a major role on PINS' platform. In fact, the company's AI models currently generate over 400 mln predictions per second, ranking what its users might engage with each time they are on the platform. Furthermore, AI is enabling the platform to draw on more relevant ads during high purchase intent time periods, driving ad engagement higher. These enhancements are resonating with advertisers, including larger advertisers that have typically allocated their marketing dollars on larger platforms.
- During the earnings call, PINS noted that with some of its large advertisers, it has now reached over 5% of their total ad budgets, or 10% of their digital ad budgets. With the recent launch of Performance+, which bundles automation and AI features to simplify ad campaign creation, PINS believes that it will attain an even larger percentage of large advertisers' ad spend.
The main takeaway is that PINS' slowing revenue growth is stoking fears that it's falling behind larger rivals like META, GOOG, SNAP. Compared to META, the company's war chest for spending on AI pales in comparison, making it very challenging to keep pace. PINS has done well to make some meaningful inroads with larger advertisers as it bolsters its AI capabilities, but it may become increasing difficult for the company to generate strong earnings growth as it ramps up spending.
Airbnb sent packing after narrowly missing Q3 EPS estimates as overseas investments weigh (ABNB)
Airbnb (ABNB -9%) is moving significantly lower today after narrowly missing analyst earnings estimates in Q3. The alternative accommodations platform has been contending with growing macroeconomic headwinds this year, primarily extending lead times. Amid inflationary pressures, travelers are not losing their demand to travel but instead waiting to book closer to their departure date, weighing on ABNB's bookings growth.
While the trend was prevalent at the beginning of Q3, it began to subside as the quarter progressed. Nights and Experiences Booked, i.e., bookings, accelerated each month during Q3 as global lead times normalized. By the end of the quarter, bookings returned to double-digit growth, an encouraging development as ABNB now has the wind at its back as it enters Q4. As a result, ABNB expects Q4 bookings to accelerate relative to Q3. However, even with this momentum, ABNB projected Q4 revenue consistent with analyst estimates, targeting $2.39-2.44 bln, implying a 9% jump yr/yr at the midpoint, representing further deceleration from Q3.
- Still, the in-line Q4 guidance is not mainly driving today's sell-off. Instead, investors are concerned over ABNB's second-straight earnings miss. During Q3, ABNB delivered decent top-line growth of 9.9% yr/yr to $3.73 bln on an 8.8% bump in bookings.
- However, this growth came at a cost. ABNB is expanding beyond its core markets, targeting countries and regions that remain underpenetrated. The company has allocated capital toward its global markets strategy, modestly eating into its bottom line. Furthermore, ABNB's global expansion investments are weighing on Q4 margins, with its revenue guidance implying several points of margin compression relative to 4Q23.
- On the bright side, ABNB's global markets strategy has been bearing fruit. In Q3, the growth rate of nights booked in ABNB's expansion markets more than doubled that of its core markets. Management added that while its strategy is working, the timing and investment level will vary by market.
- However, fortifying its presence in underpenetrated overseas markets remains central to ABNB's long-term vision, which could accompany further margin compression beyond Q4. This has investors on edge today, even though demand is beginning to pick up.
Alongside its overseas strategy, ABNB is focused on supply and enhancing its core service. The company introduced its Co-Host Network, allowing potential hosts to discover already-established hosts locally that can manage listings on Airbnb. Meanwhile, the company has launched hundreds of new features to enhance its service while removing over 300,000 listings since last year that failed to meet guest expectations. While removing supply at the same time ABNB tries to improve supply may sound counterproductive, ABNB is committed to ensuring that only the best possible listings are hosted on its platform.
Bottom line, expansion investments eroding ABNB's bottom line in Q3 and potentially in Q4 are casting a cloud on otherwise uplifting trends from the quarter, including accelerating bookings growth as lead times normalize.
Hershey Foods slips after weakening trends hurt Q3 numbers; confident in sales growth in 2025 (HSY)
A sour economic backdrop, elevated cocoa prices, and disappointing marketing performance set the stage for another lackluster quarterly report from Hershey Foods (HSY -2%). The chocolate and snack food giant missed adjusted earnings estimates by double-digits in back-to-back quarters in Q3 on lighter-than-expected revenue. With headwinds unabating, HSY trimmed its FY24 guidance, slicing around $0.49 off its earnings outlook and predicting revenue growth to stagnate yr/yr, a retreat from its previous +2% growth estimate.
- Cocoa prices have gradually declined from the crazy levels they reached earlier this year. However, they are still up over 40% from last year. To preserve its margins, HSY has been forced to pass these prices onto consumers, who are already contending with higher prices across much of their budgets. HSY noted that consumers across all incomes continue to make budgetary tradeoffs, shifting their shopping behavior toward channels like club, dollar, and online stores, where it has less developed exposure.
- At the same time, HSY's retail partners are managing inventory more tightly. Additionally, HSY is dealing with increasing competitive pressures, noting that in the U.S., it lost share to smaller players and private labels, particularly in the take-home chocolate category. Adding to the headaches, HSY commented that its promotional programming fell short of expectations during the quarter.
- These problems culminated in total snacking consumption softening to just +0.1% in the quarter, down meaningfully from the +0.9% -- an already weak figure -- in Q2. As a result, HSY delivered another quarter of underwhelming performance. HSY's adjusted EPS slid by 10.0% yr/yr to $2.34 on a 1.4% drop in revenue to $2.99 bln. Discouragingly, the issues are sticking around for the near term, eroding HSY's FY24 guidance.
What is HSY doing to counter economic troubles? Management noted that it is sharpening its seasonal planning. Already, the company feels good about the second-half growth plans discussed last quarter gaining momentum. For instance, sweets consumption accelerated from +5% in August to +23% in October, reflecting decent demand during Halloween.
Over the long term, HSY has outlined its priorities for returning to growth. First and foremost, HSY is looking to reignite the demand for chocolate. Trade and media investment is being redeployed to support HSY's many chocolate brands. Also, new offerings like freeze-dried Jolly Rancher candies are being rolled out to support HSY's confectionery business recovery. Meanwhile, HSY is prioritizing sustaining upward momentum in its salty snacks division, leaning on celebrity brand ambassadors and further media investments. Overseas, HSY is focusing on growth markets, including Latin America, the U.K., Australia, and India.
Overall, it was another tough quarter for the chocolate maker. While cocoa fundamentals are improving, it could take time before a recovery in West Africa (where cocoa is primarily harvested) and production growth across the rest of the world materializes. However, HSY is optimistic that 2025 should see the early innings of these trends, predicting positive sales growth, setting up the company to begin accelerating growth heading into 2026.
Qualcomm rides recovering handset market and emerging AI catalysts to post strong Q4 results (QCOM)
A strengthening recovering in the smartphone market, especially on the higher-end side, and continued strength in the automotive business helped Qualcomm (QCOM) handily beat 4Q24 EPS and revenue expectations. The semiconductor company also appears to be capitalizing on AI-related growth catalysts in a more meaningful way, such as the launch of Gen-AI enabled PCs and laptops, via its Snapdragon 8 series chips. With solid momentum across its three business lines -- Handsets, IoT, and Automotive -- QCOM provided a bullish outlook for 1Q25 as its EPS and revenue forecast were both above expectations, based on the midpoint of the guidance ranges.
- QCOM's growth strategy revolves around diversifying its end markets and revenue streams, but the handset market still accounts for approximately 60% of its total revenue. In Q4, handset revenue grew by 12% yr/yr to $6.09 bln, matching last quarter's growth rate, reflecting a rebounding smartphone market. Working in QCOM's favor is the fact that it skews towards the premium end of the smartphone market, including in China, its largest market. On that note, Android revenue grew by over 20%, driven by the company's premium-tier Snapdragon 8 Elite platform.
- For 1Q25, QCOM is forecasting growth to slow in handsets, projecting a mid-single-digit revenue increase. However, China is expected to remain a source of strength with revenue from Chinese OEMs jumping by 40% sequentially.
- The biggest turnaround occurred in QCOM's IoT business, which generated revenue growth of 22% to $1.68 bln, after posting yr/yr declines in each of the prior three quarters in FY24. IoT had been bogged down by a stubborn inventory glut across its OEM customers, but strengthening demand for AI-enabled PCs has pulled IoT out of its slump. During the earnings call, CEO Cristiano Amon noted that QCOM has expanded on its Snapdragon X series with the launch of Snapdragon X Plus 8-core platform, enabling OEMs to offer thinner and lighter Copilot+ PCs. Overall, QCOM now has a total of 58 platforms launched or in development across its X Series lineup.
- Turing to Automotive, the strong momentum continues as revenue jumped by 68% yr/yr to $899 mln, with another 50% increase forecasted for 1Q25. This growth is being fueled by the emergence of ADAS and self-driving technologies. To that end, QCOM recently launched the Snapdragon Cockpit Elite and Snapdragon Ride Elite platforms, which are being developed for assisted driving functionalities.
The main takeaway is that QCOM's diversification strategy paid big dividends in Q4 as each of its businesses delivered solid growth. Longer-term risks do remain, most notably including the expected loss of Apple (AAPL) as a customer as the iPhone maker moves to its own chips, but QCOM's expanding presence in the PC/laptop market should help to provide a buffer, especially if a strong PC upgrade cycle ensues with the launch of new AI features.
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