Stock Talk Weekly: Edition 3
Updated: Dec 27, 2024
Reviewing the week of December 16th - 20th
Major Market Events:
📉 Stock Selloff Intensifies: Markets experienced above-average volatility this week, with the S&P 500 dropping 2.5%. The Federal Reserve’s quarter-point rate cut has investors speculating that 2025 will bring fewer rate cuts than anticipated. The Dow Jones continues its losing streak, and this was one of the worst weeks for equities dating back to 2008.
💰 Bitcoin Surges Past $110,000: Bitcoin continues to impress investors as it reaches new highs. In the previous weeks, Bitcoin pierced the $100,000 barrier; it’s now onto bigger and better things, surpassing $110,000 and working towards the next milestone. Analysts believe Bitcoin’s rally is due to the growing crypto adoption and trust in blockchain. However, referring to Newton’s Law of Universal Gravitation, the idea that what goes up must come down falls into place. Applying this logic, the rapid ascent of Bitcoin will likely be followed by a short-term descent.
📈 Inflation Remains Steady: November’s CPI data announced a 0.2% monthly increase, totaling the annual inflation rate to 3.1%. This is a slight decrease from October’s 3.2%. Investors were relieved to see that the Federal Reserve is successfully monitoring inflation. On the other hand, many are concerned about the heightened interest rates and how long they’ll remain.
This Week's Winners:
🟢 Micron Technology (MU): Micron experienced a 12.3% surge in share price, making it one of this week's leaders in the technology sector. Their recent earnings report exceeded expectations due to the growing demand for AI-related memory chips. Additionally, MU was identified to have a high potential for 2025, reassuring investors of their role in the semiconductor industry.
🟢 Disney (DIS): Disney announced they’re restructuring to reduce costs and offer smoother operations, causing the stock to jump 8.9%. Investors were pleased to see Disney following the modern trends and shifting its focus towards streaming operations. Disney’s adaptation puts them in a better position for earning profits and long-term growth.
🟢 Nike (NKE): Nike's stock value increased 7.5% after its holiday sales report beat expectations. Although many had doubts about the retail sector, Nike proved its resilience and surpassed the concerns. Nike’s ability to adjust to consumer trends in e-commerce and global markets drives its strong performance.
🟢 Palantir Technologies (PLTR): Word spread of a government contract with Palantir for AI-based defense solutions and the share value rose 9.6%. Securing a deal with the government proves that Palantir is the leader at the intersection of AI and national security. Investors are excited by the growth and intrigued by what else Palantir might have in the works.
🟢 Apple Inc. (AAPL): The recent sales revenue for the iPhone 15 Pro Max was higher than investors and analysts expected. Apple’s strong performance led to a 6.2% increase in share value. According to analysts, the strong demand for Apple products persists and regions like China play a key role in problem-solving in the global smartphone market.
This Week's Losers:
🔴 Tesla (TSLA): Tesla announced production delays for the Cybertruck which resulted in disappointed customers and weakened investor optimism. Additionally, the blurriness of the details surrounding reduced EV tax credits in 2025 impacted the share value. The combined factors caused Tesla stock to decline 4.8% this week.
🔴 Target (TGT): Target dropped 5.1% this week as analysts downgraded the stock following weak holiday sales. The company’s dependence on discretionary spending continues to serve as its primary vulnerability. Investors and analysts have lost confidence in Target’s performance at the moment and are looking for improvement/changes in operations.
🔴 Moderna (MRNA): Moderna shared their disappointing trial results for their cancer vaccine. Many were expecting positive results and the news rattled investor confidence. investors took a step back and are proceeding with caution due to concerns about Moderna's ability to expand beyond its COVID-19 vaccine. Both the trial results and investor doubts caused the stock to suffer an 8.3% decline.
🔴 Coinbase (COIN): Regulators cracked down on Coinbase staking services, triggering a 6.4% loss in share value. Knowing the company’s largest feature was staking, it raised concerns about the long-term profitability of Coinbase. Additionally, the current volatility in Crypto added to the pressure put on the company.
🔴 Boeing (BA): Boeing shares declined 7.1% following the delay in their aircraft deliveries. They’re forced to push back their deliveries due to ongoing supply chain conflicts. With every passing day, investors become increasingly doubtful of Boeing’s ability to meet its production targets.
Upcoming Events:
📅 Federal Reserve Impact: December 21st will be the first trading day to incorporate the recent interest rate decisions from the Federal Reserve. With the signaling of increasing rates and extended durations, areas in real estate and technology will encounter increased pressure. Investors will witness the impact the Federal Reserve decision will have on bond yields.
🎯 Technology Sector: Micron Technology's strong earnings report will likely have a ripple effect on other semiconductor companies. Closely related operations like NVIDIA and AMD may be slightly impacted by Micron’s performance as investors evaluate the incoming demand for AI and memory chips. These earnings could also set the tone for greater trends in the technology sector for the upcoming year.
🎯 Energy Sector: Chevron and ExxonMobil are preparing to release quarterly performance updates. November was identified as one of the most volatile months for oil prices. The prices have since stabilized, but analysts are monitoring energy companies to gauge their problem-solving approach to supply constraints.
📊 Economic Indicators: This week sees the release of major housing information. Data surrounding housing sale prices, number of sales, median costs, etc. will be released. These numbers play a key role in determining the strength of the real estate market, especially with heightened mortgage rates.
Next Week's Watchlist:
⭐ Tesla (TSLA): Investors are seeking updates from Tesla around Cybertruck production. Furthermore, the company plans to address potential EV tax credit reductions. Tesla products are spread across international markets and will be closely monitored.
⭐ Amazon (AMZN): As the year ends, Amazon’s holiday performance will indicate overall e-commerce growth and consumer spending trends. Investors will continue to focus on Amazon’s logistics operations and expansion of the infamous Prime membership.
⭐ Carnival Corp. (CCL): Carnival’s earnings call will indicate the overall health of the travel industry during the holiday season. Investors are looking forward to the company’s improvements in forward booking and price strategies for the upcoming year.
⭐ Visa (V): As holiday shopping increases daily, the anticipation for Visa transactional data grows. The majority of people use a Visa card for their purchases and shopping is nearing its peak, this is a recipe for strong results from Visa. Analysts plan to focus on the company’s international operations.
⭐ Goldman Sachs (GS): The report from Goldman Sachs will determine the performance of the investment banking sector. Investors are aware of the effects inflated interest rates and stricter credit conditions have on investment banking companies. Additionally, the commentary surrounding capital markets is crucial.
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