Wall Street Breakfast: What Moved Markets

- The resilient U.S. stock market racked up another round of record highs on Friday, as investors looked past disappointing quarterly results from Apple and Amazon to finish the strongest month of the year. Both companies missed revenue estimates for the latest quarter and issued cautious guidance due to persisting supply chain problems. On the economic front, the U.S. economy was reported to have grown at a 2% annualized GDP pace in the third quarter to mark the slowest rate of increase in more than a year. But despite the Big Tech and GDP disappointments, stocks have been setting records, as more than 80% of companies on the S&P 500 reporting earnings so far have beaten estimates from Wall Street analysts. All three major market averages finished higher for the fourth straight week and with strong gains for October, as the Nasdaq jumped 7.2%, while the S&P surged 6.9% and the Dow climbed 5.8% for its best month since March.

	Read in Browser
Top News Shutterstock The resilient U.S. stock market racked up another round of record highs on Friday, as investors looked past disappointing quarterly results from Apple and Amazon to finish the strongest month of the year. Both companies missed revenue estimates for the latest quarter and issued cautious guidance due to persisting supply chain problems. On the economic front, the U.S. economy was reported to have grown at a 2% annualized GDP pace in the third quarter to mark the slowest rate of increase in more than a year. But despite the Big Tech and GDP disappointments, stocks have been setting records, as more than 80% of companies on the S&P 500 reporting earnings so far have beaten estimates from Wall Street analysts. All three major market averages finished higher for the fourth straight week and with strong gains for October, as the Nasdaq jumped 7.2%, while the S&P surged 6.9% and the Dow climbed 5.8% for its best month since March.       On The Move Wild $T1mes! Tesla (TSLA) received membership to an exclusive stock market club on Monday as its market capitalization topped $1T. Shares surged 13% to $1,025, marking its biggest one-day advance since March 9, while the momentum came only one session after the stock breached $900. The catalyst behind the advance was a deal with Hertz (OTCPK:HTZZ), which placed an order for 100K Model 3 sedans to rent in major U.S. markets and parts of Europe. Snapshot: The contract will bring in a reported $4.2B for Tesla, making it the largest-ever purchase of electric vehicles. The cars are slated for delivery within the next 14 months, according to Bloomberg, and customers will have access to Tesla's network of superchargers. Hertz has even hired Tom Brady, the seven-time Super Bowl-winning quarterback, to star in ads showcasing the new Teslas. Wedbush's Dan Ives said the new deal is the "tipping point" for Tesla and welcomed the "watershed moment" of passing the $1T market cap. He also pointed to several advantages the company holds over latecomers to the industry, including the "battery technology moat, the supply moat... and then you look at just the brand and the cache that Musk has built." "We've never viewed Tesla as an automotive company," added Ives. "We've viewed it as a disruptive technology company," highlighting his firm's $1,500 bull-case price target. Thought bubble: Tesla only builds around 500K cars per year - out of the 90M that are built worldwide - but it's still worth more than the next nine automakers combined. That's why many have compared its valuation to a technology company, similar to the way Apple (AAPL) is a tech giant that manufactures phones. While Tesla does have new revenue models that could demand a premium, like a subscription for full-self driving mode, there can also be meme forces at play for a company that is beloved by traders across the investing landscape. "Wild $T1mes!" Elon Musk exclaimed in a widely-shared tweet. (409 comments)       Featured Sleeper Stocks For The Supply Chain Disruption Seemingly out of nowhere, an overlooked group of stocks has exploded higher by 125% so far this year. Only one analyst on Seeking Alpha had his readers perfectly positioned in these "sleeper" stocks before their run up. This Tuesday, November 2nd, he's holding a free webinar to reveal the next set of sleeper stocks he believes are poised for an imminent breakout over the next 3-6 months. Register Now » Trending Earnings flurry Google parent company Alphabet (GOOG, GOOGL) shattered expectations on Tuesday with Q3 results that showed the biggest quarterly revenue gain in 14 years. The figure rose more than 40% Y/Y (or 39% in constant currency) to over $65B amid stronger-than-expected advertising revenues. The search giant appears to be cashing in on a rebound in search traffic, especially with keywords related to travel and retail trends that are picking up globally. Bigger picture: It's looking to reverse the recent story in social Big Tech, where Alphabet, Facebook (FB) and Snap (SNAP) all slid in the wake of latter's quarterly results. Some even referred to the phenomenon as "ad-mageddon," which reflected a painful hit to ad revenues from Apple's (AAPL) update to iOS privacy policies (requiring a double opt-in for ad tracking). However, Google appears to have survived the change unscathed, given its own storage houses full of personal data. Meanwhile, Microsoft's (MSFT) shift toward more cloud-based software and services continued to pay off for the software giant and led it to report strong quarterly numbers. The company's Azure cloud division grew by 36%, with FQ1 sales coming in at $20.7B. At Google, cloud computing missed elevated consensus estimates, but at $5B, it still notched Y/Y growth of 45%. Analyst commentary: "I don't know how much better it can get from Microsoft," noted Brent Thill, an analyst with Jefferies. "To grow at that rate, at their size, is insane. I have no other way to put it... Both of these stocks [Microsoft and Google] have just been massive outperformers." (86 comments)       Earnings More Big Tech Investors didn't receive good news from Apple (AAPL) on Thursday, with shares falling 3.7% AH to $146.99. The iPhone maker can't meet demand for its products, especially as the holiday season approaches, due to supply chain problems around the world. Looking ahead, CEO Tim Cook was unable to give a timeline for the chip shortage to ease, saying "it is unclear how long it will last" and it depends on how the economy performs in 2022. By the numbers: Earnings came in at $1.24 a share, meeting expectations, but the $83.4B revenue figure missed estimates by $1.6B (for the first time since 2018). Sales were impacted by $6B in "industry-wide silicon shortages," as well as "COVID-related manufacturing disruptions." The company generated $38.9B in iPhone revenue (+47% Y/Y), Services totaled $18.3B (+26% Y/Y), Mac sales reached $9.2B (+2% Y/Y), iPad notched $8.3B (+22% Y/Y) and "Wearables, Home and Accessories" brought in $8.8B (+11% Y/Y). Quarterly results didn't look much better at Amazon (AMZN), which badly missed earnings and revenue forecasts for the third quarter. CEO Andy Jassy additionally said the retail giant expects to take on "several billion dollars" of extra costs in its consumer business in Q4 due to labor shortages, higher employee costs, global supply chain constraints and increased freight and shipping costs. "It'll be expensive for us in the short term, but it's the right prioritization for our customers and partners," he declared, as AMZN shares slipped 4% AH to $3,446. For the first time ever: Revenue from Amazon services, like AWS, advertising, third-party seller services and Prime subscriptions, surpassed the retail sales division ($54.9B vs. $49.9B during the quarter).

     

Tech

Meet Meta

Facebook (NASDAQ:FB) CEO Mark Zuckerberg used his keynote address at the Connect conference this week to unveil the social media giant's new corporate identity: Meta. "Our mission remains the same," he declared. "We're still a company that designs technology around people, but now we have a new North Star. From now on, it's going to be Metaverse first." According to Zuckerberg, the Metaverse is an "embodied internet," or the "next chapter of the internet," where people can "interact in immersive, 3D and shared digital worlds."

What it means: The rebranding comes at a time when the social network is reeling from a massive internal document leak, as well as a ramping up of regulatory pressure and Congressional testimony. The move wouldn't just clear the company of bad vibrations, but follow in the footsteps of Google's (GOOG, GOOGL) parent company changing to Alphabet. Meta wants to be known for more than social media and a separate parent name could put Facebook under a larger umbrella, along with Instagram, WhatsApp, Oculus and more.

As part of the re-branding, Meta will begin trading under the ticker symbol MVRS on Dec. 1. Shares climbed as much as 4% on Thursday following Zuckerberg's announcement, though they pared gains after the head of the firm's Metaverse division cautioned investors that massive investments in the burgeoning technology might take more than a decade to fully pay off. "The Metaverse vision for us is a 5-, 10-, 15-year journey," Vishal Shah told CNBC.

FAANG in flux: There have already been some contortions since Jim Cramer coined the FANG term in 2013 to refer to Facebook, Amazon (AMZN), Netflix (NFLX) and Google. It then moved to FAANG to accommodate Apple (AAPL), and Netflix later made room from Microsoft (MSFT) in some iterations, leading to FAAMG. While there was no appetite to change when Google became Alphabet - though Cramer did flag FAAAM for some time - Facebook's move does allow for some new possibilities (post ideas in the comments section).

     

Energy

COP26

There's a lot on the table for the future of the energy market as world leaders meet this weekend in Glasgow, Scotland. The talks, known as COP26 (Conference of the Parties' 26th annual summit), will be eyed for clues to how a faster transition toward a zero-carbon economy will affect everything from investing sectors to individual stocks. Plans are expected to detail methods of cutting emissions, financing the steps away from fossil fuels and launching a tradable credit system that would offset polluting activities.

Quote: "For investors, current climate trends suggest making environmental considerations a part of their long- and short-term portfolio strategies," said Sarah Norman, senior investment strategist at Bank of America.

The total cost of the transition is around $150T, per BofA, while decarbonization efforts could boost global inflation by up to 3% annually (as central bank balance sheets rise by $500B per year). "It'll certainly be expensive, but we believe it can be done with technology, the economy, markets and ESG joining forces." BofA also estimates that a third of global equity inflows are currently headed to funds with a sustainability label.

Cost of inaction: Besides disastrous environmental consequences for the planet, Bank of America forecasts that over 3% of GDP would be lost every year by 2030, growing to $69T by 2100. Around 5% of global equity stock market value (approximately $2.3T) could also be wiped out by climate policy re-pricing, with a "potentially extreme hit to corporate earnings for certain sectors." Meanwhile, BofA says those searching to benefit from climate solutions should look to these names ahead of the COP26: NextEra Energy (NYSE:NEE), Enphase Energy (NASDAQ:ENPH), Generac (NYSE:GNRC), Lucid (NASDAQ:LCID) and Waste Connections (NYSE:WCN). (6 comments)

     

U.S. Indices
Dow +0.4% to 35,820. S&P 500 +1.3% to 4,605. Nasdaq +2.7% to 15,498. Russell 2000 +0.2% to 2,297. CBOE Volatility Index +5.4% to 16.26.

S&P 500 Sectors
Consumer Staples +0.1%. Utilities -0.5%. Financials -0.9%. Telecom +2.%. Healthcare +1.6%. Industrials -0.3%. Information Technology +2.%. Materials +0.3%. Energy -0.8%. Consumer Discretionary +4.%.

World Indices
London +0.5% to 7,238. France +1.4% to 6,830. Germany +0.9% to 15,689. Japan +0.3% to 28,893. China -1.% to 3,547. Hong Kong -2.9% to 25,377. India -2.5% to 59,307.

Commodities and Bonds
Crude Oil WTI -0.6% to $83.25/bbl. Gold -0.6% to $1,784.9/oz. Natural Gas +5.3% to 5.559. Ten-Year Treasury Yield +0.2% to 130.7.

Forex and Cryptos
EUR/USD -0.76%. USD/JPY +0.48%. GBP/USD -0.53%. Bitcoin +0.8%. Litecoin -2.1%. Ethereum +4.3%. Ripple -1.1%.

Top Stock Gainers
Bakkt Hldgs (NYSE:BKKT) +365%. Diginex (NASDAQ:EQOS) +92%. Inspira Technologies Oxy B.H.N. (NASDAQ:IINN) +85%. Hcw Biologics (NASDAQ:HCWB) +81%. Gh Research (NASDAQ:GHRS) +75%.

Top Stock Losers
Cortexyme (NASDAQ:CRTX) -78%. Retail Value (NYSE:RVI) -77%. Rafael Holdings (NYSE:RFL) -76%. Angion Biomedica (NASDAQ:ANGN) -51%. Phunware (NASDAQ:PHUN) -51%.

Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.

Seeking Alpha's Wall Street Breakfast Podcast

Seeking Alpha's Wall Street Breakfast podcast brings you all the news you need to know for your market day. Released by 8:00 AM ET each morning, it is a quick listen that you can put on as you get ready to start your working day.

  Download Seeking Alpha for your Phone or Tablet



Want More Ideas?

Our best ideas → Stock Ideas
ETF's Investing Ideas → ETF Ideas
Dividend stocks ideas → Dividend Ideas

This email was sent to you because you signed up to receive Wall Street Breakfast.
If you do not want to receive Wall Street Breakfast emails, click here to unsubscribe.

Sent by Seeking Alpha, 52 Vanderbilt Avenue, 13th floor, New York, NY 10017

Share this

Share on FacebookPlus on Google+