The Stock Market This Week: November 16-20

By: Stacey Nickens

  • Earnings Reports
    • Walmart reported earnings per share of $1.34 and revenue of $134.7 billion in Q3. Both their EPS and revenue clocked in above expectations. Walmart executives attributed their strong third quarter to a growth in e-commerce.
    • Home Depot reported earnings per share of $3.18 and revenue of $33.54 billion in Q3. Both their EPS and revenue clocked in above expectations. Home Depot executives attributed their strong third quarter to consumers spending increased funds on home improvement projects.
    • Target reported earnings per share of $2.79 and revenue of $22.63 billion in Q3. Both their EPS and revenue clocked in above expectations. Target executives attributed their strong third quarter to dramatic increases in their digital sales, curbside pickups, and home deliveries.
    • Lowe’s reported earnings per share of $1.98 and revenue of $22.31 billion in Q3. Their revenue clocked in above expectations; however, their EPS fell slightly short of the expected $1.99 in earnings per share. During the third quarter, sales at Lowe’s stores increased more than 30%; however, the home improvement retailer also faced steeper labor costs as well as higher expenses related to building out their e-commerce platform. Both of these expenditures cut into Lowe’s Q3 earnings.
  • Economic News
    • The Empire State Manufacturing Survey declined to 6.3 in November. The survey showed that manufacturing growth has slowed in New York; however, the report also stated that manufacturers remain optimistic.
    • October’s retail sales increased 0.3% m/m, coming in slightly under expectations. The modest increase suggests that consumers have somewhat reduced their spending on clothing, furniture, and food services.
    • Industrial production increased in October by 1.1% m/m, demonstrating that industrial production has recovered a majority of its pandemic losses.
    • The NAHB Housing Market Index for November came in at 90, beating its record from last month.
    • Business inventories rose in September.
    • Import prices decreased in October, while export prices increased.
    • Housing starts in October climbed 4.9% m/m and reached the highest level seen since February. Building permits were flat but remained above their pre-pandemic levels. The reports showed continued strength in the single-family housing market. In additional positive housing market news, existing home sales increased 4.3% m/m in October.
    • Initial claims for the week ending in November 14 rose to 742,000. Continuing claims for the week ending in November 7 declined to 429,000. The rise in initial claims pointed to a slowdown in the job market in November.
    • The Leading Economic Index also rose 0.7% m/m in October.
  • Major Corporate News
    • Tesla will be joining the S&P 500 on December 21.
    • Boeing received approval to fly their 737 Max airplane.
    • Pfizer and BioNTech reported that their vaccine was 95% effective during Phase 3 trials. The two companies then filed for emergency use authorization of their COVID-19 vaccine.
    • Moderna announced that their vaccine candidate had a 94.5% efficacy rate when tested on a small group of individuals.

On Monday, investors continued to shift funds into value and cyclical stocks following additional positive vaccine news. Moderna announced that their vaccine candidate featured a 94.5% efficacy rate. Pfizer made a similar announcement last week, and as a result, some of the economy’s hardest-hit industries have ridden higher on optimistic thinking. Cyclical energy, industrials, financials, and materials all performed strongly in daily trading. The S&P 500 accordingly rose 1.2%, and the Dow Jones climbed 1.6%. While growth stocks underperformed cyclical stocks, growth equities still gathered strength from positive news in the semiconductor space. Taiwan Semi announced they will be expanding their production capacity. By close, the Nasdaq had climbed 0.8%. In economic news, the Empire State Manufacturing Survey declined to 6.3 in November. The survey showed that manufacturing growth has slowed in New York; however, the report also stated that manufacturers remain optimistic.

On Tuesday, major indexes declined slightly during a cool-down session following yesterday’s highs. The S&P 500 fell 0.5%. The Nasdaq declined 0.2%, and the Dow Jones fell 0.6%. Most sectors saw small losses; however, the utilities sector fell the most, declining 2%. Energy and real estate were the only sectors to post gains in daily trading. The market turned mildly pessimistic following the release of October’s retail sales. Total retail sales increased 0.3% m/m, coming in slightly under expectations. The modest increase suggests that consumers have somewhat reduced their spending on clothing, furniture, and food services. However, economic news for the day was largely optimistic. Industrial production increased in October by 1.1% m/m, demonstrating that industrial production has recovered a majority of its pandemic losses. Additionally, the NAHB Housing Market Index for November came in at 90, beating its record from last month. Business inventories rose in September. Import prices decreased in October, while export prices increased. In individual company news, both Walmart and Home Depot posted impressive earnings reports. Finally, Tesla will be joining the S&P 500 on December 21.

On Wednesday, major indexes declined despite an influx of largely positive vaccine, economic, and corporate news. It seemed that the market had already priced in such optimism during its rally on Monday and continued to consolidate those gains. The S&P 500 fell 1.2%. The Nasdaq lost 0.8%, and the Dow Jones declined 1.2%. All sectors finished in negative territory, with the largest losses seen among the energy, utilities, health care, and real estate sectors. The industrials sector declined the least, falling a modest 0.5%, bolstered by additional positive news from Pfizer and BioNTech. The partnered companies announced that their vaccine proved 95% effective during their Phase 3 trials. They reported that they now plan to file for emergency use authorization of the vaccine. In economic news, housing starts in October climbed 4.9% m/m and reached the highest level seen since February. Building permits were flat but remained above their pre-pandemic levels. The reports showed continued strength in the single-family housing market. In corporate news, both Target and Lowe’s presented strong quarterly reports, and Boeing received approval to fly their 737 Max.

On Thursday, major indexes rose on renewed hope for fiscal stimulus. The S&P 500 rose 0.4%. The Nasdaq increased 0.9%, and the Dow Jones climbed 0.2%. The energy sector led the pack, rising 1.5%, while utilities and health care were the two sectors to finish in negative territory. During daily trading, Senate Minority Leader Chuck Schumer said that Senate Majority Leader Mitch McConnell agreed to restart stimulus discussions. AstraZeneca also announced that their Phase 2 vaccine data showed encouraging immune responses among older patients. In economic news, initial claims for the week ending in November 14 rose to 742,000. Continuing claims for the week ending in November 7 declined to 429,000. The rise in initial claims pointed to a slowdown in the job market in November. In additional positive housing market news, existing home sales increased 4.3% m/m in October. The Leading Economic Index also rose 0.7% m/m in October.

On Friday, major indexes spiraled lower due to a series of disappointing news repots. The S&P 500 fell 0.7%. The Nasdaq declined 0.4%, and the Dow Jones fell 0.8%. Despite advancing issues outnumbering declining issues in the Nasdaq, ten of the 11 S&P 500 sectors finished in negative territory. Only the utilities sector posted modest gains. The market turned pessimistic after Treasury Secretary Steve Mnuchin said they would not extend five emergency lending programs beyond December 31. Additionally, JPMorgan announced they are now forecasting a negative GDP for Q1 of 2021. (JPMorgan is still forecasting an economic rebound during 2021’s second and third quarter.) Finally, California announced a curfew to reduce the spreading of COVID-19. These three news events overshadowed additional positive vaccine news from Pfizer, who filed for emergency use authorization for their COVID vaccine.

Source: Yahoo Finance, briefing.com