Weekly | Technological Concentration
Your weekly summary with the most important news for your investments.
Your weekly summary with the most important news for your investments:
Financial market performance during the week.
Factors that influenced stock market performance.
Other relevant events to take into account in relation to market behavior.
The week was marked by greater stock market demand, leading to an average weekly return of +2.2% for the main US stock indexes, accompanied by greater demand for fixed income instruments, with the sovereign rate closing at 4.44% (-20 basis points). At the same time, the price of oil, measured by WTI, continued to fall, closing close to US$76 per barrel, dropping -6.4% so far in November, also moderating inflation expectations as we enter the final stretch of the year.
Among the factors that influenced the stock market performance were:
Good inflation data from the previous month where the general trend is downward, giving the Federal Reserve (FED) degrees of decisional freedom at its last monetary policy meeting in December.
The quarterly results published by retail companies where the focus was on inventory management entering the pre-Christmas sales period that formally starts this coming Friday with Black Friday.
The meeting between the leaders of the United States, Joe Biden, and China, Xi Jinping, passed without much fanfare, where the US concern apparently lies in a potential invasion of Taiwan by China, where President Xi would have postulated the desire for a "peaceful reunification" of both nations. A couple of hours after the extensive meeting between the two leaders, Biden called Xi a dictator, once again straining the relationship between the two governments.
The U.S. Congress approved the short-term executive order introduced by House Speaker Mike Johnson, thus avoiding a partial shutdown of the federal government while they resolve their differences during the end-of-year holidays.
The departure of Sam Altman, CEO of OpenAI (owner of ChatGPT), and his subsequent hiring by Microsoft, during the weekend was the soap opera to follow along with the election results in Argentina, where Javier Milei won the presidency with almost 56% of the votes.
This week, due to the Thanksgiving holiday on Thursday, we should expect less stock market liquidity with the following companies reporting their results including Best Buy, Burlington, Deere, Dick's Sporting Goods, Kohl's along with tech companies HP, Nvidia and Zoom who will be formally closing out the quarterly earnings season. On the macroeconomic front, the focus will be on the release of the minutes of the Fed's latest monetary policy meeting to be released the following Wednesday, where market participants will be looking for details to determine whether or not the Fed's interest rate hike cycle has come to an end. Expect everything related to Artificial Intelligence, including this strange saga of OpenAI and Microsoft along with Nvidia's results to be at the center of the news given the importance it has played in U.S. stock returns. According to Goldman Sachs, the following stocks: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, referred to by the press as the Magnificent 7, today represent 30% of the S&P 500 having returned on average +70% so far this year with the rest of the 493 companies only having returned +6%. The outperformance of these companies has been led by expectations and potential growth in the artificial intelligence industry. On the inflation front, U.S. headline inflation eased more than expected last month to 3.2% (from 3.7%), while core inflation, which excludes food and energy prices, remained at 4% (from 4.1%). On the producer inflation front, the data were more auspicious, easing to 1.3% (from 2.2%) and 2.4% (from 2.7%), respectively, both of which are already very close to the Fed's 2% inflation target. These data were very well received by market players, thus auguring that the interest rate hike cycle may have (temporarily) come to an end. Nevertheless, it is to be expected that monetary authorities will continue to verbally intervene in order to anchor short and medium-term inflation expectations.
On the corporate front, the spotlight was taken by retail companies who focused on the inventory levels with which they are entering the year-end holidays. In the case of Walmart, whose share price was off -6.5% for the week after hitting an all-time high, that company's CEO Doug McMillon noted:
"In the U.S., we may be going through a period of deflation in the coming months, and while that would put more pressure on us at the unit level, we welcome it, because it's better for our customers."
This comment should not be taken simplistically as Walmart has almost 240 million weekly visits to its U.S. stores. For his part Target CEO Brian Cornell, whose share price rallied almost +18% following the release of its quarterly results, said:
"In the third quarter, our team continued to successfully navigate our business through a very challenging external environment. While third quarter sales were consistent with our expectations, earnings per share far exceeded our guidance. This profitable performance came from our team's commitment to efficiency and disciplined inventory management, and I want to thank them for their tireless efforts."
Finally, on the geopolitical front, Israel tirelessly continues the incursion into the Gaza Strip in search of Hamas proxies, Ukraine and Russia continue bilateral skirmishes while Argentina, with the resounding election of Javier Milei, will impose change on the regional political front.
In conclusion, only an unexpected event on the technological front will be enough to quickly change the returns obtained by the market, because there is a strange stock market concentration in a certain number of technological instruments.
This Week
Monday (November 20)
Quarterly Reports
Agilent Technologies, Inc.
Keysight Technologies Inc.
Trip.com Group Limited
Symbotic Inc.
Zoom Video Communications, Inc.
Tuesday (November 21)
Quarterly Reports
NVIDIA Corporation
Lowe's Companies, Inc.
Medtronic plc
Analog Devices, Inc.
HP Inc.
Best Buy Co., Inc.
Economic Reports
Federal Open Market Committee minutes released.
National Activity Index Report, Chicago Fed
Wednesday (Nov. 22)
Quarterly Reports
Deere & Company
SK Telecom Co., Ltd.
GDS Holdings Limited
Ingles Markets, Incorporated
Macro Bank Inc.
Economic Reports
Perishable Goods Monthly Change in Orders Report
Final Michigan Consumer Sentiment Report
5-Year Inflation Expectations Report, Michigan
Thursday (Nov. 23)
Quarterly Reports
Johnson Controls International plc
Aegon Ltd.
Veradigm Inc.
Urban One, Inc.
Cartesian Therapeutics, Inc.
Friday (November 24)
Quarterly Reports
H World Group Limited
LightInTheBox Holding Co., Ltd.
Natuzzi, S.p.A.
Lexaria Bioscience Corp.
Now you have more information about your investments. See you next week with more news.
*This is an illustrative example and does not represent an investment recommendation.