Stock Region Market Briefing
Stock Region Market Briefing Newsletter – Thursday, November 21, 2024
Stock Region Market Briefing Newsletter – November 21, 2024
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Disclaimer: This newsletter is for informational purposes only and does not constitute financial or investment advice. Always consult a licensed professional for specific recommendations. Markets are inherently unpredictable; past performance does not guarantee future results.
Global News and Market Impacts
Biden Pledges $4 Billion to Support Global Development
The U.S. has committed $4 billion to the World Bank’s International Development Association (IDA) over three years. This influx targets essential development projects in low-income countries, potentially benefiting companies in the infrastructure and industrial sectors.
Growth Stocks to Watch:
Caterpillar Inc. (CAT) has strong exposure to global development projects. It recently reported a 7% YoY growth in operating profit.
Fluor Corporation (FLR), focusing on engineering and construction, could see increased demand tied to developing nations.
Russia Fires ICBM Amid Conflict Escalation
Russia has launched an intercontinental ballistic missile (ICBM) during attacks on Ukraine, intensifying geopolitical turmoil. Defense stocks and commodities like oil are poised to be impacted as tensions rise.
Defense Opportunities:
Lockheed Martin (LMT) reported 14.1% revenue growth in Q3, driven by heightened global military expenditures.
Raytheon Technologies (RTX), with diverse missile systems, remains a crucial defense sector player.
Energy Stocks to Watch:
ExxonMobil (XOM) and Chevron (CVX) could benefit from potential energy supply disruptions.
Australia's Proposed Social Media Ban for Minors
Australia seeks to ban social media access for those under 16, potentially increasing regulatory pressures on tech companies.
Tech Under Scrutiny:
Meta Platforms (META), which recently experienced a 23% YoY ad revenue increase, could face extra compliance costs.
Alphabet (GOOGL) may see higher monitoring and age verification expenses.
Growth Stocks:
Look to Microsoft (MSFT) for potential revenue upticks in AI content moderation systems.
Palo Alto Networks Firewall Vulnerabilities Exploited
Hackers exploited zero-day vulnerabilities in Palo Alto Networks' firewalls, prompting urgent security updates. The cyber sector remains central as risks escalate.
Key Cybersecurity Stocks:
CrowdStrike (CRWD), a market leader with a 37% YoY revenue growth amid higher demand for advanced security solutions.
Fortinet (FTNT), maintaining a strong foothold in network security, remains a solid pick.
FCC Chair Jessica Rosenworcel Resigns
Jessica Rosenworcel steps down as FCC Chair, leaving a leadership vacuum as internet and telecom regulations evolve.
Telecom Uncertainty:
AT&T Inc. (T) and Verizon Communications (VZ) may see a cautious phase as the regulatory stance shifts.
CFPB Targets Digital Payment Platforms
Digital payment giants like PayPal (PYPL) and Apple Pay (AAPL) face tighter regulations. Enhanced scrutiny aims to curb fraud and secure data, but compliance costs may dampen margins.
Growth Picks:
Block Inc. (SQ) could see expanded adoption as industry regulations improve consumer confidence.
Keep an eye on Visa (V) as it integrates with these platforms for smoother domestic transactions.
Britain Allegedly Implicated in Ukraine War
Allegations of the UK’s direct involvement in Ukraine, amid escalating NATO tensions, could impact regional stocks and energy markets alike.
ICC Issues Arrest Warrants for Israeli and Hamas Leaders
The International Criminal Court's decision marks a critical geopolitical development but has yet to show market-related ripples.
Defense Sector Steadies:
Watch broader defense ETFs like SPDR S&P Aerospace & Defense ETF (XAR).
Beyond Questions $40M Container Store Investment
Beyond's skepticism over financing terms with The Container Store (TCS) signals retail industry uncertainties. TCS shares are already trading at a 12% YoY decline.
Retail Stocks Caution:
The retail sector could face constrained lending and financing terms.
Allegiant Travel Extends Aircraft Agreement with Boeing
Allegiant Travel (ALGT) extended its purchasing timeline with Boeing (BA) to 2027, ensuring necessary fleet flexibility.
Key Takeaways:
Allegiant’s adjusted timelines ease investor concerns, while Boeing continues tackling supply chain bottlenecks.
Zurich Insurance Sets Ambitious Growth Targets
Zurich’s new goal of 9% annual core earnings growth by 2027 underscores optimism in the insurance market's resilience.
Insurance Sector Leader:
Chubb Limited (CB) stands alongside Zurich as it navigates evolving consumer needs and business models.
Julius Baer Sees Boost in Asset Management
Julius Baer has accelerated asset inflows, reflecting wealth management’s robust appeal in volatile global markets.
Banking Sector Growth:
Explore Morgan Stanley (MS) and Goldman Sachs (GS) as high-level competitors.
Novartis Raises Revenue Outlook
Novartis (NVS) forecasts a 6% currency-adjusted annual revenue boost through 2028, thanks to a strong drug pipeline. This confirms healthcare as a consistently bullish sector.
Pharma Growth Opportunities:
Merck & Co. (MRK) and Pfizer Inc. (PFE) exhibit similar resilience with their diverse drug portfolios.
JD Sports Adjusts Profit Guidance
Retailer JD Sports (JDSPY) has lowered profit projections, driven by unseasonable weather and intense promotional activity.
Retail Risks:
Seasonal retail stocks like Gap Inc. (GPS) and Urban Outfitters (URBN) may see correlating challenges.
Resolute Mining’s Challenges in Mali
The release of Resolute Mining’s CEO after detainment in Mali highlights the rising political risks miners face, especially in Africa.
Gold Stocks:
Consider Barrick Gold (GOLD) or Newmont Corporation (NEM) for diversified exposure to mining portfolios.
Boohoo Replaces Chairman Amid Corporate Tensions
Boohoo’s decision reflects deeper issues within retail leadership and possible volatility ahead.
European Gas Prices Surge Amid Tensions
Amid heightened geopolitical risks, European natural gas prices hit record levels.
Energy Stock Plays:
European oil & gas majors like BP (BP) and Shell (SHEL) could see heightened earnings.
MicroStrategy Faces Bitcoin Investor Scrutiny
MicroStrategy (MSTR) continues its Bitcoin acquisitions but faces criticism over shareholder returns and transparency.
Crypto-Adjacent Stocks:
Monitor Coinbase (COIN) and crypto-influencing ETFs, but expect continued volatility.
Kia Unveils High-Performance EV9 GT
Kia enters the Tesla-charging ecosystem with its EV9 GT. Featuring a 500+ horsepower engine, this aligns Kia against leaders like Tesla (TSLA) and Rivian (RIVN).
Things to Watch:
Battery sector leaders like Panasonic (PCRFY).
Matt Gaetz Withdraws AG Candidacy
Gaetz’s withdrawal signals reduced political turmoil for markets largely detached from this decision.
Russia Threatens U.S. Base in Poland
With tensions rising, defense sectors face more gains as Kremlin rhetoric heightens.
University of Texas Offers Tuition Incentive
The University of Texas promises expanded free tuition access, signaling positive developments in U.S. education affordability but minimal stock impacts.
Thanksgiving Meal Costs Drop
Thanksgiving meals are 5% cheaper due to lower turkey prices and changing protein preferences. This could improve near-term consumer sentiment.
Stock Market Forecast
The market continues absorbing global geopolitical risk, balancing tailwinds from infrastructure projects and innovation in healthcare and EVs. Expect defensive sectors (healthcare, utilities) to outperform in volatility, while growth stocks (tech, renewable energy) offer long-term opportunities.
Bullish Picks:
Look towards infrastructure-related ETFs like Global X US Infrastructure Development (PAVE) and healthcare funds.
Cautionary Note:
Regulatory and geopolitical headwinds may weigh on tech and retail sectors in the short term.
Market Overview
The stock market witnessed a solid recovery session on November 21, 2024. All major indexes showed gains, with some sectors rallying strongly. Here's an overview of performance across major indexes:
S&P 500 (+0.5%): Broad gains were seen across multiple sectors, with utilities, industrials, and consumer staples leading the push higher.
Dow Jones Industrial Average (+1.1%): Strong performances in blue-chips like Deere & Co. (DE) provided the much-needed boost.
Nasdaq Composite (+0.1%): Tech-heavy index stayed flat, dragged lower by Alphabet (GOOG), after news of a DOJ push for divestitures in its Chrome and Android units.
Russell 2000 (+1.7%): Small-cap stocks outperformed as investors rotated into value and cyclical plays.
Leadership came from utilities (+1.8%), industrials (+1.2%), and financials (+1.3%) sectors, while communication services (-1.7%) faced significant headwinds. News about Nvidia (NVDA) showcasing solid earnings lifted sentiment, though mega-caps lagged overall.
Treasury yields edged higher with the 10-year yield settling at 4.43%, reflecting ongoing recovery in existing home sales and a reduction in jobless claims.
Pagaya (PGY) (+2.63% | Close $9.00)
Pagaya filed for a Class A common stock offering of 504,440 shares. This move indicates an effort to expand its capital base as it continues pursuing growth in AI-driven financial services.
News Corp (NWSA) (+1.34% | Close $29.54)
News Corp voted to eliminate its dual-class structure, a pivotal step toward simplifying governance. This effort aims to increase shareholder confidence and potentially attract a broader investor base.
Index Changes
Effective Tuesday, November 26, 2024, several key companies will see an index reshuffle prompted by the ConocoPhillips (COP) acquisition of Marathon Oil (MRO):
Texas Pacific Land (TPL) joins the S&P 500.
Mueller Industries (MLI) moves to the S&P MidCap 400.
Atlas Energy Solutions (AESI) joins the S&P SmallCap 600.
These shifts reflect evolving market cap classifications and investment group dynamics.
Johnson & Johnson (JNJ) (+1.57% | Close $155.50)
Health Canada approved JNJ's CARVYKTI for earlier-stage treatment of multiple myeloma. CARVYKTI now leads as the first BCMA-targeted therapy approved at this stage. This approval could expand Johnson & Johnson's oncology market footprint significantly.
Brookfield Corp (BN) (+2.04% | Close $57.53)
Brookfield Residential's partnership with Kolter Group marks a strategic move to supply finished lots to homebuilders across the Southeastern U.S. This venture positions Brookfield to capitalize on the region's growing housing demand.
Boeing (BA) (Down 1.83% | Close $143.41)
Boeing secured a series of U.S. defense contracts, including $2.39 billion for the Air Force and $1.68 billion for the Navy, affirming its strong position in the aerospace and defense sector.
Protagonist Therapeutics (PTGX) (+2.46% | Close $41.65)
Protagonist nominated PN-881 as a development candidate. This candidate expands their existing portfolio focused on innovative treatments for chronic diseases.
North American Construction Group (NOA) (+0.69% | Close $19.74)
NOA secured a $125 million two-year contract for water diversion systems in oil sands mining operations, showcasing its operational expertise and growth focus.
Orion Group (ORN) (Flat | Close $8.73)
ORN announced $111 million worth of contracts across South Carolina, Florida, and Texas. Projects include pedestrian bridges, marine development, and infrastructure for data centers, reflecting a diverse pipeline of opportunities.
Gap (GAP) (+6.93% | Close $22.06)
Gap topped Q3 earnings expectations with EPS of $0.72 and revenue in line at $3.83 billion, up 1.6% year-over-year. A standout performer, Athleta posted a 5% jump in comparable sales. Gap raised FY25 revenue guidance, further boosting investor confidence.
More Growth Stocks to Watch
Johnson & Johnson (JNJ)
With CARVYKTI's newly broadened approval, JNJ continues to be a significant player in advancing cancer therapies, generating strong growth in the biotech space.
Current Price: $155.50 | YTD Return: +12.5%
Boeing (BA)
Despite a recent sell-off, Boeing's defense contracts reflect growing demand for its services amid U.S. defense budget increases.
Current Price: $143.41 | YTD Return: -2.6%
Texas Pacific Land (TPL)
Newly elevated to the S&P 500, TPL benefits from both structural index flows and a robust energy sector.
Current Price: $635.43 | YTD Return: +18.9%
Gap (GAP)
Positive guidance amid earnings momentum highlights recovery in consumer retail. Gap's focus on operational improvement and consumer-centric strategies is paying off.
Current Price: $22.06 | YTD Return: +32.4%
Orion Group (ORN)
Multiple project wins indicate a diversification-driven growth strategy. Infrastructure-focused plays like ORN could benefit greatly as U.S. spending expands.
Current Price: $8.73 | YTD Return: +14.2%
The broader market remains cautiously optimistic as stronger-than-expected economic data indicates solid demand despite persistent inflationary pressures. Positive catalysts include improving job market metrics and gradually recovering consumer sentiment. However, expected headwinds in Q4 revolve around rising Treasury yields, continued pressure on mega-cap growth stocks, and geopolitical uncertainties.
Looking ahead to the close of 2024, we anticipate moderate growth driven by cyclical rotation into small-cap and undervalued sectors like industrials, financials, and energy. While mega-caps may face resistance, the broader market could see the S&P 500 wrapping near +20% YTD if macro conditions remain stable.
Closing Disclaimer: This market briefing integrates up-to-date analysis but may not capture all economic influences. Please perform independent research or consult financial professionals before making investment decisions. Stock Region holds no liability for losses stemming from reliance on this newsletter.
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