The Stock Market This Week: December 7-11

By: Stacey Nickens

• Earnings Reports
  • Thor Industries reported earnings per share of $2.05 and revenue of $2.54 billion in the first quarter. Thor beat expectations on both revenue and EPS, citing increased demand for RVs due to the pandemic.
  • Smartsheet reported revenue of $90.9 million in Q3. Smartsheet’s revenue came in above expectations, as did their operating income and net free cash flow. Overall, analysts were impressed by Smartsheet’s ability to increase core billings and attract large customers. Analysts also highlighted that Smartsheet’s acquisition of Brandfolder has performed better than expected due to strong management.
  • Chewy reported earnings per share of $0.14 and revenue of $1.72 billion in the third quarter, beating estimates. Analysts highlighted Chewy’s higher customer retention rates as well as the fact that Chewy customers are spending larger amounts. Both of these trends suggested that Chewy will be able to continue its momentum moving forward.
• Economic News
  • Consumer credit rose by $7.2 billion in October.
  • The NFIB Small Business Optimism index fell in October by 2.6 points. October’s index clocked in at 101.4. The index declined due to concerns about COVID infection rates; however, the index’s reading still remains above the 47-year average of 98. However, the portion of the index that tracks uncertainty among business owners did rise to historic levels. Additionally, the number of owners who believed business conditions would improve over the next 6 months fell by 8%.
  • Job openings increased unexpectedly in October. Job openings hit a three-month high of 6.652 million. Analysts had predicted job openings would decline to 6.3 million.
  • Initial jobless claims rose to 853,000 and hit their highest level since the week of September 18.
  • Both Core CPI and Total CPI increased 0.2% m/m November. These numbers were inline with expectations and demonstrated that inflation is not currently a significant concern.
  • Core and total PPI increased 0.1% m/m in November.
  • Consumer Sentiment improved in November.
• Major Corporate News
  • Both Airbnb and DoorDash raised their price ranges on their IPOs that are scheduled for later this week.
  • The Federal Trade Commission and 48 states sued Facebook over antitrust activity.
  • DoorDash went public in one the year’s largest IPOs. DoorDash’s newly available stock opened at $182, significantly above its IPO price of $102.
  • AirBnB went public with an opening price of $146 per share.

On Monday, the Nasdaq gained 0.5% due to strength among growth stocks. However, value and cyclical stocks struggled to perform, and as a result, the S&P 500 declined 0.2%. The Dow Jones fell 0.5%. Rising infection rates and renewed lockdowns dominated the headlines. Investors thus moved funds into perceived safe havens such as Apple, Facebook, and Tesla. Accordingly, the information technology and communication services sectors posted gains in daily trading. Utilities also made gains, while energy posted the largest decline among all sectors. In individual company news, Boeing and Pfizer were two value stocks that still performed strongly in daily trading. Pfizer’s vaccine could be approved by the FDA this week, and UBS upgraded Boeing’s stock to a Buy ratings. The day’s economic reports showed that consumer credit rose by $7.2 billion in October.

On Tuesday, major indexes reversed course from the day before and posted daily gains. The S&P 500 climbed 0.3%. The Dow Jones added 0.4%, and the Nasdaq rose 0.5%. Fiscal stimulus, COVID infection rates, and vaccine news remained the predominant market drivers. Energy, healthcare, materials, and consumer staples had the strongest trading day. Comparatively, the financials, consumer discretionary, and consumer services sectors struggled to perform. In individual company news, Smartsheet reported revenue of $90.9 million in Q3. Smartsheet’s revenue came in above expectations, as did their operating income and net free cash flow. Overall, analysts were impressed by Smartsheet’s ability to increase core billings and attract large customers. Analysts also highlighted that Smartsheet’s acquisition of Brandfolder has performed better than expected due to strong management. In other earnings news. Thor Industries reported earnings per share of $2.05 and revenue of $2.54 billion in the first quarter. Thor beat expectations on both revenue and EPS, citing increased demand for RVs due to the pandemic.

On Wednesday, major indexes declined. The S&P 500 fell 0.8%. The Dow Jones fell 0.4%, and the Nasdaq slide 1.9%. FAANGS struggled during daily trading. Accordingly, the technology and communication sectors were the worst performers of the day. Energy, industrials, and materials finished in positive territory. There didn’t seem to be any new market drivers. The market continued to move around fiscal stimulus, vaccine optimism, concerns about vaccine supplies, and concerns about lofty tech valuations. In corporate news, the Federal Trade Commission and 48 states sued Facebook over antitrust activity. Additionally, DoorDash went public in one the year’s largest IPOs. DoorDash’s newly available stock opened at $182, significantly above its IPO price of $102. Earnings reports showed a strong third quarter for the pet supplies company, Chewy. Chewy reported earnings per share of $0.14 and revenue of $1.72 billion in the third quarter, beating estimates. Analysts highlighted Chewy’s higher customer retention rates as well as the fact that Chewy customers are spending larger amounts. Both of these trends suggested that Chewy will be able to continue its momentum moving forward. In economic news, job openings increased unexpectedly in October. Job openings hit a three-month high of 6.652 million. Analysts had predicted job openings would decline to 6.3 million.

On Thursday, the S&P 500 declined 0.1%. The Dow Jones feel 0.2%. However, IPO enthusiasm helped the Nasdaq gain 0.5%. AirBnB went public with an opening price of $146 per share. Enthusiasm for the IPO seemed to inspire a buy-the-dip mentality that helped bolster the information technology sector. However, energy and small-cap stocks were the big winners of the day due to rising oil prices. Both Starbucks and Adobe reported strong earnings results; however, only Starbucks stock responded positively to this news. In economic data, initial jobless claims rose to 853,000 and hit their highest level since the week of September 18. Additionally, both Core CPI and Total CPI increased 0.2% m/m November. These numbers were inline with expectations and demonstrated that inflation is not currently a significant concern.

On Friday, the S&P 500 fell 0.1%. The Nasdaq declined 0.2%, while the Dow Jones added 0.2%. During daily trading, Walt Disney announced optimistic updates to their subscription business. The announcement helped the communication services sector make gains. Comparatively, the energy and financial sectors were the worst performers. The market did pare back some of its earlier losses following some positive headlines. The Senate passed a resolution to fund the government through December 18, and the FDA gave emergency use authorization tp Pfizer and BioNTech for their vaccine. In economic news, core and total PPI increased 0.1% m/m in November. Additionally, Consumer Sentiment improved in November.