Market Overview
Stocks surged during a busy week marked by quarterly earnings releases, a rate cut from the Federal Open Market Committee (FOMC), and the conclusion of congressional and presidential elections. Following the election, the Dow Jones Industrial Average climbed over 1,500 points, the Russell 2000 increased by 5.8%, the Nasdaq Composite rose by 3.0%, and the S&P 500 gained 2.5%, achieving its best post-election performance ever.
Investors were relieved by the election outcome, anticipating that President-elect Trump's plans to lower tax rates and reduce regulations would stimulate economic growth. This sentiment was reflected in several areas:
- Small-cap stocks soared.
- Financial stocks surged.
- The U.S. dollar strengthened against major currencies.
- Bitcoin prices increased significantly.
- Cyclical sectors outperformed.
Key Market Movers
Tesla (TSLA, Financial) was a standout performer, benefiting from the idea that Elon Musk's support for Trump would be advantageous for the company, with shares rising 29.0% over the week. The FOMC's decision to cut the fed funds rate by 25 basis points to 4.50-4.75% did not hinder the market rally. The Fed Chair, Jerome Powell, emphasized that policy decisions would be made on a meeting-by-meeting basis and did not rule out further rate cuts in December. He also noted that the Fed is unable to model for Trump's proposed policies due to a lack of specifics.
Changes in the Dow Jones Industrial Average
Starting November 8, NVIDIA (NVDA, Financial) and Sherwin-Williams (SHW, Financial) replaced Intel (INTC, Financial) and Dow Inc. (DOW, Financial) in the Dow Jones Industrial Average.
Guru Stock Picks
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Today's News
Salesforce (CRM, Financial) is making a significant move by planning to hire 1,000 new employees to advance its generative AI platform, Agentforce. This expansion aims to capitalize on the growth of AI agents capable of autonomous business operations. This development follows Salesforce's partnership with Google Cloud (GOOGL, Financial) and Nvidia (NVDA, Financial) to enhance these capabilities. Salesforce shares saw a 3.5% increase, reflecting investor optimism about the potential multi-billion dollar opportunity this new platform represents.
Costco (COST, Financial) achieved an all-time high of $962.00, outperforming retail giants Walmart (WMT, Financial) and Target (TGT, Financial) amid investor optimism post-U.S. elections. The retailer reported strong core comparable sales growth of 6.5% for October, with total net sales up 7.2%. Analysts attribute this success to strategic membership enhancements and the rollout of card scanners, which have boosted membership counts significantly at select locations.
Twilio (TWLO) ended its six-day winning streak, closing slightly down by 0.13% at $92.29. Despite this, the stock has seen a 65.2% increase over the past year. Analysts remain optimistic, with a Strong Buy rating from Seeking Alpha's Quant Ratings and a positive outlook on its market-leading position in CPaaS. The stock's potential for continued profitability and growth is emphasized despite past market volatility.
JFrog (FROG) experienced a 7% decline as the market reacted to tech earnings. Despite surpassing Q3 estimates, the company cited macroeconomic challenges impacting its outlook. Analysts from Truist and Stifel maintain a Buy rating, adjusting price targets to $35, while Piper Sandler initiated coverage with a Neutral rating at $32, indicating cautious optimism amidst market choppiness.
Spirit AeroSystems (SPR, Financial) edged up 0.3% following reports of a potential funding agreement with Boeing (BA, Financial), which could provide a much-needed financial lifeline. This comes as Spirit Aero faces operational challenges and cash flow issues, raising concerns about its ability to continue as a going concern. The deal, if confirmed, may include asset sales to bolster liquidity.
Prospect Capital (PSEC) saw a 6.8% drop after announcing a 25% cut in distributions to shareholders. This move is part of a strategy to shift focus towards first lien senior secured loans, reducing its CLO equity exposure. Despite topping fiscal Q1 earnings estimates, the market reacted negatively to the reduced dividend payouts.
Sunrun (RUN, Financial) led solar stocks lower with a 15.6% drop after reporting a surprise Q3 loss. Despite a decline in revenue, the company surpassed 1 million residential solar customers and increased its storage capacity significantly. Sunrun remains optimistic about cash generation and future installations, maintaining guidance for substantial storage and solar capacity growth.
Tesla (TSLA, Financial) surged 6.7% to exceed a $1 trillion market cap, driven by expectations of accelerated delivery growth and autonomy advancements. The U.S. election results are seen as favorable for Tesla, with potential regulatory relaxations benefiting the EV sector. Tesla's valuation now surpasses the combined market cap of the next ten largest auto manufacturers.
Archer Aviation (ACHR, Financial) rallied after updating on its progress towards FAA type certification for its eVTOL aircraft. The company is advancing through the final phase of certification, with plans to complete its manufacturing facility soon. Archer's focus remains on building aircraft for testing and early commercial deployment, positioning it for future growth in the urban air mobility market.
Medical Properties Trust (MPW) announced a $745 million agreement to sell a majority of Prospect’s managed care platform to Astrana Health (ASTH). The transaction is expected to close in mid-2025, pending regulatory approvals. Astrana plans to invest significantly in Prospect, enhancing healthcare access and quality for local communities.
GuruFocus Stock Analysis
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