Stock Region Market Briefing
Happy Thanksgiving! Stock Region Market Briefing - November 28, 2024
Stock Region Market Briefing - November 28, 2024
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Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Stock market investments carry inherent risks, and past performance is not indicative of future results. Please consult a qualified financial advisor before making investment decisions.
Market Summary and Key Updates
1. Dow Hits Record 45,000 Before Retreating ($DJI, $SPX, $IXIC)
The Dow Jones Industrial Average ($DJI) reached an all-time high but slipped due to weakness in the tech sector. Shares of Dell ($DELL) and HP ($HPQ) dropped over 10% following disappointing earnings. Nvidia ($NVDA) and Microsoft ($MSFT) also saw declines, pulling down the Philadelphia Semiconductor Index ($SOXX) by 3%. Despite this, the S&P 500 ($SPX) is on track for its best monthly gain in a year.
Growth Stocks to Watch:
Palantir Technologies ($PLTR): Short float 4.18%, stabilizing post-selloff.
Super Micro Computer ($SMCI): Attractive AI infrastructure stock with a short float of 17.48%.
2. Fed’s Preferred Inflation Metric Steadies at 2.3%
The Personal Consumption Expenditures (PCE) price index rose 2.3%, meeting expectations. This steady inflation rate supports the likelihood of the Federal Reserve holding interest rates steady, providing breathing room for growth stocks and value investments alike.
Key Beneficiaries: Big growth names in sectors like finance and industrials if monetary policy eases.
3. European Gas Prices Ease, But Winter Could Reverse Trend
European natural gas prices fell 2.4% to €46.10/MWh amid easing supply fears. However, a colder-than-usual winter may drive energy demand, potentially raising LNG prices.
Sector Focus: Invest cautiously in energy-focused ETFs or utility stocks such as Royal Dutch Shell ($SHEL).
4. Arabica Coffee Prices Near 47-Year High
Arabica coffee surged 69% this year due to severe drought in Brazil. Firms like Starbucks ($SBUX) and JM Smucker ($SJM) may see squeezed margins as increased costs impact supply chains.
Alternatives: Agricultural ETFs focusing on emerging market commodities may provide opportunities for growth.
5. Pony AI’s IPO Reignites Autonomous Driving Buzz
Pony AI debuted on Nasdaq at $13/share, valuing the company at $4.55 billion. The IPO raised $452.4 million, spotlighting the growing race in autonomous driving technology.
Growth Stocks to Watch:
Pony AI ($PONY): Early AI-driven transportation leader.
Nvidia ($NVDA): Leader in AI and GPUs, critical for autonomous tech.
Tesla ($TSLA): Continuous innovation in driverless car solutions.
6. Trump Administration Cabinet Picks Shaping Market Sentiment
President-elect Trump announced key nominees like Jamieson Greer as U.S. Trade Representative and Kevin Hassett for National Economic Council. Trade-heavy sectors (exports, industrials) may see volatility if tariffs on China are reinstated.
7. China Frees U.S. Prisoners Ahead of Trade Talks
China released three U.S. detainees, a move tied to improving diplomatic ties. Potential trade tensions remain, aligning with Trump’s hardline stance against China.
Market Impact: Tech and auto exporters like Apple ($AAPL) and Ford ($F) could experience future volatility.
8. Trump Cabinet Nominees Targeted by Bomb Threats
High-profile swatting incidents against Trump nominees have spotlighted political tension. While not yet market-moving, prolonged instability could cloud short-term economic outlooks.
9. Australia Bans Social Media for Under-16s
A landmark Australian law bans children under 16 from platforms like TikTok, Instagram, and Facebook. Companies like Meta ($META) and Snap ($SNAP) could face scrutiny in other countries considering similar measures.
10. Nikkei Wary as U.S. Trade Policy Evolves ($N225)
U.S. trade policy uncertainties under Trump’s administration may weigh on Japan’s Nikkei 225 ($N225). Auto exporters like Toyota ($TM) and Honda ($HMC) stand to lose if tariffs are reinstated.
11. Oil Prices Stable as OPEC Decision Nears
Oil prices saw little movement as traders await OPEC's production meeting. Key producers' decisions could sway Brent Crude ($BRENT) and WTI Crude ($WTI).
12. Gold Dip Reflects Inflation Worries ($GC_F)
Gold prices dipped amid concerns over slow inflation progress. A fluctuation in the dollar has increased volatility, offering opportunities for both risk-tolerant and risk-averse investors.
13. Japanese Bond Market Tracks U.S. Treasury Gains
Investors pushed Japanese Government Bonds higher, mirroring gains in U.S. Treasuries. Economic uncertainty remains a major driver of this trend.
14. Yen Weakens After Recent Rally
Profit-taking and market repositioning led to a temporary decline in the yen’s recent strength, signaling a pause in upward currency momentum.
15. Surge in Global Chip Stocks ($SOXX, $TSM)
Chip stocks like Taiwan Semiconductor Manufacturing ($TSM) and Advanced Micro Devices ($AMD) rallied in global markets despite U.S. softness.
Growth Sectors: AI-related chipmakers remain resilient amid high consumer demand.
16. Winter Energy Demands Loom for Europe
Supply optimism dropped gas prices short-term, though looming winter demands may flip markets. Short-term ETF rotation into LNG suppliers could be bright spots.
17. FTC Now Investigating Microsoft ($MSFT)
The FTC launched an antitrust probe into Microsoft's cloud, AI, and cybersecurity practices. MSFT’s bundling practices join earlier crackdowns on Big Tech firms.
Volatility Watch: Tech-heavy portfolios should tread cautiously around regulatory developments.
18. EU Ends Amazon Tax Fight
The EU’s long-standing case against Amazon ($AMZN) concluded with no additional tax liabilities. This frees Amazon from uncertainties, allowing focus on Black Friday demand and year-end performance.
19. Trump Meets Zuckerberg Over Outreach
During a meeting at Mar-a-Lago, Meta's CEO Mark Zuckerberg pledged openness toward tech policy reforms under Trump. Market responses could vary based on perceived regulatory alignment between Meta and federal priorities.
20. Social Media Compliance Challenges Loom
Age-verification mandates passed in Australia could influence global social media reform movements. Analysts expect wider headwinds for user-reliance platforms.
21. Chipmakers Volatile Amid Nasdaq Correction Efforts
While $SOXX dipped momentarily this week, niche players in AI and fabrication ecosystems saw sharp rebounds in late trading.
Stock Region Picks: Look toward scalable producers like $TSM, uniquely positioned amid cost inflation concerns.
Stock Market Forecast
Market Predictions for Q1 of 2025:
Dow Jones Industrial Average ($DJI): Modest 3% growth as industrials rebound.
S&P 500 ($SPX): Anticipated 4% gains with strong consumer focus.
Nasdaq Composite ($IXIC): Volatility persists due to semiconductors, but longer-term demand looks promising.
AI and Renewable Growth Prospects
Sectors tied to renewable energy, autonomous technologies, and AI innovation are likely to draw continued investor focus through Q1. Ponies, Chips, and EVs lead robust exploration portfolios.
Growth Picks:
Pony AI ($PONY): IPO debut wows mobility markets; significant watchlist winner.
Celsius ($CELH): Strong fundamental trends make it compelling in consumer health.
Rocket Lab ($RKLB): Consistently outperforming in small satellite niche.
Market Recap
Thanksgiving Week Market Dynamics
On Wednesday, the markets showed mixed activity ahead of the Thanksgiving holiday closure, with a slight decline in major indices but strong performance in small-cap stocks. Here's how the numbers closed:
S&P 500: -0.4% (-5.61 points), YTD +25.8%
Nasdaq Composite: -0.6% (-79.73 points), YTD +27.0%
Dow Jones Industrial Average: -0.3% (-98.45 points), YTD +18.7%
Russell 2000: +0.1% (+1.34 points), YTD +19.7%
Investors favored smaller-cap stocks over mega-cap tech during Wednesday's session. This sector rotation aligns with recent trends, with the Russell 2000 surging 10.5% since late October. Mega-cap technology and chip stocks saw weakness as traders locked in gains following a strong year-to-date rally.
The bond market strengthened with yields dropping across key maturities:
10-Year Treasury Yield: Fell 6 bps to 4.24%
2-Year Treasury Yield: Fell 4 bps to 4.21%
Encouraging economic data, such as a 2.0% rise in October pending home sales and a 0.4% increase in real disposable income, supported optimism. Yet, core PCE inflation remained sticky above the Fed's 2% target, tempering prospects for rapid rate cuts.
Company News and Updates
Comtech Telecommunications Corp. (CMTL | $3.50, +0.24)
Comtech announced Kenneth Traub as its new Executive Chairman. This leadership shift brings Traub to a senior executive role aimed at steering the company forward. Current CEO John Ratigan will report directly to Traub, signaling potential strategic changes. Keep an eye on Comtech for any follow-up announcements that may reveal its growth trajectory or market repositioning.
Priority Technology Holdings (PRTH | $10.06, +0.04)
PRTH filed for a common stock offering of $100 million, alongside a secondary offering from existing shareholders. The stock has gained traction due to its focus on payment solutions. However, new issuance may dilute short-term value for current shareholders. Analysts may be watching for how PRTH uses the raised capital to grow its market reach.
Gilead Sciences, Inc. (GILD | $92.41, +1.06)
Gilead announced the publication of its PURPOSE 2 Phase 3 trial results in the New England Journal of Medicine. This pivotal trial evaluated lenacapavir for HIV prevention. With strong trial outcomes and a focus on innovative therapies, Gilead continues to solidify its leadership in pharmaceuticals. The company is up 40.8% YTD, making it a potential growth stock for investors tracking advancements in healthcare.
Sandstorm Gold Royalties (SAND | $5.83, +0.03)
Sandstorm Gold shared updates about its diversified royalty portfolio, highlighting continued success in key projects. With economic uncertainty persisting, precious metals-focused companies like SAND offer potential stability. Its forward-looking revenue streams are tied to producing properties and development-stage assets.
Qiagen (QGEN | $43.76, +0.52)
Qiagen introduced new tools to enhance microbial analysis capabilities, aimed at the digital PCR and NGS markets. This innovation could drive adoption in sectors such as healthcare, environmental testing, and food safety. The company's stock is up 15.3% YTD, reflecting robust investor sentiment in biotech applications.
Four Corners Property Trust (FCPT | $29.54, +0.11)
FCPT announced the acquisition of five Outback Steakhouse properties for $19.7 million. This strategic purchase highlights the company's continued focus on acquiring high-quality income-generating assets in the restaurant sector.
Applied Therapeutics (APLT | $8.57, -1.64)
The FDA issued a Complete Response Letter regarding the company's NDA for govorestat. This regulatory setback led to a sell-off, with APLT tumbling 16.46% on the day. The company is expected to seek additional meetings with the FDA or revise its application framework.
Stocks to Watch
Mid- and Small-Cap Stocks: Keep track of the Russell 2000 (RUT) as it outpaces large-cap indices. Among small caps, check out Sandstorm Gold (SAND) and Comtech (CMTL) for their growth narratives.
Healthcare and Biotech: Gilead Sciences (GILD) is at the forefront with its record-breaking pharmaceutical innovations. Qiagen (QGEN) is another name to follow for its groundbreaking solutions in microbial analysis.
Real Estate Growth: Four Corners Property Trust (FCPT) has consistently expanded its real estate portfolio in the restaurant sector, proving itself resilient even in times of economic uncertainty.
Economic Indicators
Personal Income & Spending: October personal spending increased by 0.4%, while income rose by 0.6%, suggesting a strong consumer base heading into the holidays.
Core PCE Inflation: Slightly sticky at 0.3% MoM in October. Annual figures remain above 2%.
Labor Market Strength: Weekly jobless claims were a low 213,000, signaling continued resilience in employment trends.
Investors should prepare for further rate policy announcements as the Fed analyzes inflation and broader economic indicators.
Stock Market Forecast
The stock market is poised to maintain moderate growth into December, boosted by resilient consumer spending, easing treasury yields, and growing confidence in small cap stocks. However, technology may remain under pressure due to valuation concerns and softening earnings.
Growth prospects in healthcare, biotech, and real estate remain strong as those sectors are less correlated to rate sensitivity. Overall, markets could see continued upward momentum, with an emphasis on small caps and cyclical industries.
Short-term risks include any unexpected geopolitical tensions or disappointing earnings among large-cap firms. Investors would also be wise to monitor data releases signaling changes in inflation or employment conditions.
Disclaimer: This newsletter offers no guarantees of specific returns or outcomes. Investment decisions should be approached after careful due diligence. Always seek individualized advice from a licensed financial professional.
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