Market Performance on Election Day
The stock market experienced substantial gains on Election Day. The S&P 500 increased by 1.2%, the Nasdaq Composite rose by 1.4%, the Dow Jones Industrial Average climbed 0.4%, and the Russell 2000 advanced 1.9%. This upward movement was driven by a rise in the ISM Services PMI for October, signaling positive prospects for economic and earnings growth. Additionally, the market was buoyed by relief over the resolution of some election uncertainties before Wednesday's trading. Although some election-related uncertainties remain, such as extended vote counting and potential recounts, many stocks saw positive movement.
Sector and Stock Highlights
- The equal-weighted S&P 500 also rose by 1.2%, with 24 out of the 30 Dow components closing with gains.
- All 11 S&P 500 sectors ended higher, with seven sectors gaining at least 1.0%. The consumer discretionary sector led with a 1.8% gain.
- The information technology sector rose by 1.5%, driven by gains in mega caps and chipmakers.
- NVIDIA (NVDA) was a standout, increasing by 2.8% to $139.91, surpassing Apple (AAPL, Financial) in market cap, which rose 0.7% to $223.45.
Significant Stock Movements
- Palantir Technologies (PLTR) surged by 23.5% to $51.13.
- DuPont (DD) increased by 4.7% to $85.67.
- GlobalFoundries (GFS) saw a 14.9% rise to $41.37, all in response to earnings reports.
Treasury Market Overview
Treasuries had mixed results. The 10-year yield decreased by two basis points to 4.29%, while the 2-year yield increased by three basis points to 4.21%. This was influenced by the day's economic data and a $42 billion 10-year note sale that saw strong demand.
Year-to-Date Index Performance
- Nasdaq Composite: +22.8% YTD
- S&P 500: +21.2% YTD
- Dow Jones Industrial Average: +12.0% YTD
- S&P Midcap 400: +13.5% YTD
- Russell 2000: +11.5% YTD
Economic Data Review
The September Trade Balance Report indicated a widening trade deficit to $84.4 billion, compared to a revised $70.8 billion in August. This was due to a $3.2 billion decrease in exports and a $10.3 billion increase in imports, pointing to a stronger U.S. economy relative to global counterparts.
The S&P Global US Services PMI slightly declined to 55.0 in October, while the ISM Services PMI increased to 56.0%, reaching its highest level since July 2022. This indicates accelerated activity in the services sector, with employment activity returning to expansion. However, the Backlog Index showed deeper contraction, potentially slowing future expansion.
Upcoming Economic Data
Looking ahead to Wednesday, market participants will receive the weekly MBA Mortgage Applications Index at 7:00 ET and the weekly EIA Crude Oil Inventories at 10:30 ET.
Overseas Market Performance
Europe: DAX +0.6%, FTSE -0.1%, CAC +0.5%
Asia: Nikkei +1.4%, Hang Seng +2.1%, Shanghai +2.3%
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Today's News
AstraZeneca (AZN, Financial) faced a significant selloff on Tuesday following reports of a fraud investigation in China, a crucial market for the company. The investigation, which could involve senior executives, centers around allegations of insurance fraud. This news comes as a blow to AstraZeneca, which relies heavily on China for revenue, marking it as the company's third-largest market. The investigation is expected to impact the broader Chinese pharmaceutical sector amidst a slowdown in the country's hospital industry.
Devon Energy (DVN, Financial) reported a positive third quarter, with non-GAAP EPS of $1.10 aligning with expectations and revenue of $4.02 billion exceeding forecasts by $470 million. The company saw its shares rise by 2.69%, highlighting its potential to capitalize on rising oil prices. Despite short-sellers increasing their positions against energy stocks, Devon's performance suggests it remains undervalued, with a shareholder yield nearing 9%.
Trump Media and Technology Group (DJT, Financial) experienced a volatile trading session on U.S. Election Day, closing down 1.2% after a rally of up to 19% earlier in the day. The stock's trading volume was significantly high, with over 147 million shares exchanged, marking a 3.8 times increase over its three-month daily average. The volatility led to three trading halts, reflecting the market's uncertainty amid the election.
Casey’s General Stores (CASY, Financial) announced the completion of its acquisition of Fikes Wholesale, adding 148 stores in Texas and 50 in other southern states. This strategic move expands Casey's store count to approximately 2,900 locations, marking the largest acquisition in the company's history. The acquisition aligns with Casey's strategic plans, enhancing its presence in key markets.
Coupang (CPNG, Financial) saw its shares decline in post-market action despite posting a mixed Q3 earnings report. The company reported a 27.3% year-over-year revenue increase, surpassing estimates by $140 million. However, the market reacted negatively to the earnings report, reflecting investor concerns despite strong growth in Coupang's developing offerings segment.
Super Micro Computer (SMCI, Financial) shares dropped 17% after announcing preliminary first-quarter results that fell short of previous guidance. The company expects earnings per share between $0.75 and $0.76 on revenue between $5.9 billion and $6 billion, below analyst expectations. The results are preliminary due to the recent resignation of its auditor, adding to investor uncertainty.
Meta Platforms (META, Financial) reportedly closed an internal virtual reality studio and reduced funding for external app developers, leading to staff cuts and project delays. This move comes as Meta shifts its focus on developer funding, impacting companies like Monks and Atlas V, which were involved in creating content for Meta's virtual reality projects.
Sixth Street Specialty Lending (TSLX, Financial) reported in-line Q3 earnings with adjusted net investment income per share of $0.57. The company declared a Q4 base dividend of $0.46 per share and a Q3 supplemental dividend of $0.05. Despite a slight decline in adjusted annualized return on equity, TSLX's stock edged up 0.1% in after-hours trading.
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