November 22, 2024 – This week, markets balanced geopolitical tensions, Nvidia’s strong earnings, Bitcoin nearing $100K, and retailer performance. Bond yields eased slightly, aiding stocks, but rising rates remain a concern. Economic data showed mixed housing results but strong U.S. growth momentum. Retail and tech stocks surged, while Bitcoin gained on post-election optimism and crypto-friendly speculation.
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U.S. missiles fired out of Ukraine into Russia, Nvidia's earnings report, Bitcoin nearing the $100,000 milestone, and retailer earnings took center stage this week, accompanied by key economic updates. Last week ended with rising bond yields as the primary driver behind declining stock performance. This week, bonds rallied slightly, easing some of the pressure, but a few days don’t make a trend. Bond prices have been falling, driving rates higher since the Fed's rate cut in September, and this remains a significant concern for investors assessing rising stock valuations. Despite this, post-election momentum continued, helping the S&P 500 notch another weekly gain.
The 10-year Treasury yield briefly reached 4.5% overnight but eased to 4.41% by Monday, providing some relief to stocks that had faced pressure from rising yields the previous week. Interestingly, markets did not react as strongly as expected to geopolitical developments on Tuesday and later in the week. Reports emerged that President Putin had lowered Russia’s threshold for using nuclear weapons in response to Ukraine’s launch of U.S.-made missiles into Russia. Russian Foreign Minister Lavrov labeled the attack an “escalation signal.” Later in the week, Russia responded by firing a hypersonic ballistic missile at a Ukrainian military facility, with Putin warning that the conflict risked escalating into a global crisis. Again, stocks and rates largely brushed off the geopolitical news – which is good news and speaks to the momentum we’re seeing.
Nvidia’s earnings on Wednesday’s close were another key player this week as their earnings announcements have sparked waves of buying in the tech sector since the 1st quarter earnings season in 2023. Shares initially traded lower on profit-taking Thursday given another slight deceleration in their revenue growth rate, which met analyst expectations, but the stock finished the day positive. Revenue almost doubled year over year, up 93.6% with its data center revenue up 112%. H200 sales are accelerating, which confirms comments from Taiwan Semi who said AI server processors are set to triple year-over-year in Fiscal Year 2024. The company anticipates a doubling in enterprise AI revenues this year with industrial AI and robotics accelerating. The company also said its Blackwell is already in the hands of its partners and the demand is “staggering”.
Bitcoin was up all consecutive trading days this week and is closely approaching $100,000 USD. There have been some leaks from a Bloomberg report this week that President-elect Donald Trump may appoint the first ever White House “crypto czar” which checks out as Trump has been surrounding himself with many crypto believers. In July, Trump made promises at a bitcoin conference that he would make U.S. the “crypto capital of the planet”. This week, Trump named Howard Lutnick, CEO of Cantor Fiztgerald, as Commerce Secretary – who has claimed to have “hundreds of millions of dollars of exposure to bitcoin”. Robert F. Kennedy Jr. which has been nominated to U.S. Health Secretary and rumors Bill Hagerty could be nominated as his Treasury Secretary – both known to be crypto advocates. The jump in bitcoin’s price since the election is closely tied to Trump’s win and of course the technical breakout to all-time highs after a three-year consolidation is yet another factor.
Retailers were notable earnings players this week. Some of the highlights came from Target (down 21.4%) after disappointing guidance. Williams-Sonoma (up 27.5%), Gap (up 12.84%), and Ross Stores (up 2.19%) were some of the winners. The success of these earnings announcements has pushed the S&P retail ETF (XRT) to a new 52-week high Friday, which may be breaking a three-year consolidation there and should be followed closely in the weeks ahead with the holiday season upon us.
To finish the week, economic results were mostly good. The NAHB Housing Market index rose to 46 in November. October Housing starts were soft with starts down 4% year-over-year, largely impacted by weather from hurricanes and signs inventory may becoming more available in the October Existing Homes sales, which increased. Weekly Initial Claims fell to 213,000. Friday, the flash S&P Global November Eurozone Manufacturing PMI deepened its contraction and Services unexpectedly contracted, driving the euro lower to a fresh 52-week low. In the U.S., growth continues to accelerate while inflation cools with the S&P Global Flash US PMI up from October to a 31-month high. S&P Global said “expectations are running high of output in the coming year on lower interest rates, improved economic growth, and more supportive business policies”.
That wraps up this week in the market with rising geopolitical risks with Russia, Nvidia’s and retail company earnings, bitcoin’s push to $100,000, and economic reports this week that pave the way to solid U.S. growth.
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