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Sizing Up the S&P 500
- S&P 500 rises 7 straight sessions, longest positive streak since November 2021
- Nasdaq-100 up 8 straight sessions, longest positive streak since October 2021
- S&P 500 holds monthly channel similar to mid-1990s soft landing.
- Resistance near October high of 4393 and 50-day MA
- Potential for consolidation into CPI on 11/14
- Potential support at 4330, low from late June, mid-August
- Intermarket: Potential support from weakening U.S. Dollar
- Growth stocks outperform value more than 2:1 in the last 5 sessions.
- Housing jumps in past week as rates fall
- Energy leads to the downside as demand worries hit crude
- Materials, Industrials lag amid economic worries
- Latin American stocks outperform as U.S. dollar weakens
- Transports under pressure as weaker economy hits shipping rates
- Conditions more like 2020 as economy and inflation slow.
- Recent data suggest a final “return to normal” post-Covid, with labor and energy shortages easing.
- A “soft landing” is potentially at hand.
- High-beta growth stocks and housing could benefit.
- Apple (AAPL): Bloomberg reports tech executives to meet with Xi of China in effort to smooth tensions.
- Deutsche Bank: Loan officer survey shows tighter lending standards and weaker demand potentially indicates a recession in the next 12 months.
- Chris Waller: Labor Supply normalizing to pre-pandemic levels.
- Austan Goolsbee: Fed might slow inflation without a recession.
- Last week’s “Goldilocks” news mix:
- Q3 productivity beats as wage growth misses
- Unemployment and wages lower than expected
- Initial jobless claims ticking higher, surpassing estimates
- October ISM Services show faster deliveries as demand slows.
- Powell “now asking” whether to hike more.
- FactSet: Analysts cutting earnings forecasts at fastest pace since Q2 of 2020.
Housing in Focus
- D.R. Horton (DHI) jumps after earnings, revenue and guidance beat.
- CEO Donald Horton: “The supply of both new and existing homes at affordable price points remains limited and demographics supporting housing demand remain favorable.”
- Upcoming catalysts:
- 11/14: Home Depot (HD) earnings
- 11/16: NAHB homebuilder sentiment
- 11/17: Housing starts & building permits
- 11/21: Lowe’s (LOW) earnings, existing home sales
Cyclicals Reveal Slowdown
- Emerson Electric (EMR): Biggest drop since the pandemic after earnings, revenue and revenue guidance miss.
- Air Products (APD): Biggest drop since the pandemic as revenue misses.
- Expeditors of Washington (EXPD): Earnings, revenue miss.
- CEO Jefferey Musser: “Deceleration of demand continues… rates generally remained soft while capacity exceeded demand in most lanes. The shipping industry has been undergoing a great unwinding of so many of the drivers that led up to the massive mismatch of supply and demand that occurred during the pandemic.”
- CNH Industrial (CNHI) hits 3-year low after earnings, revenue miss.
- This is the opposite of conditions in early 2022 when cyclicals rallied and inflation spiked.
High Beta Growth Rallies
- Datadog (DDOG) earnings, revenue beat
- MongoDB (MDB), Snowflake (SNOW) follow MDB higher
- Snap (SNAP) inching toward July price gap after results beat.
- Palantir (PLTR) holds gains after results beat.
- Arista Networks (ANET), Palo Alto (PANW): Smaller tech stocks in S&P 500 that may gain prominence.
- Dell Technologies (DELL), Intel (INTC): 1990s comebacks amid PC recovery.
- CrowdStrike (CRWD), Synopsys (SNPS) and Cadence Design (CDNS) may have yearend momentum.
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