Dow Posts Big Gains, Stocks Look for Positive End to Solid Week; Gold, Silver Higher; WTI Crude Stuck Near $70

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While the NASDAQ languished after less-than-spectacular forward guidance from Nvidia (NVDA) - which is now the poster child for the term "priced to perfection" - Dow Industrials took up market slack and powered ahead, ending the day just 427 points (less than one percent) from the all-time closing high of 44,293.13 (November 11, 2024), powered by gains in IBM (IBM) and Salesforce (CRM).

The day's gains on the Dow turned the week completely around for the index of 30 blue chip stocks. After Wednesday's close, the Dow was down around 35 points. Thursday's effort changed that small loss into a large gain.

That helped it catch up to the NASDAQ, which is ahead by 292 points on the week, heading into Friday. The S&P also shrugged off the losses from last week and has posted a positive number every day this week, up 78 points through Thursday's closing bell.

A pair of mid-tier retailers posted third quarter results after the close on Thursday, both companies reporting a strong quarter and superior guidance heading into the holiday shopping season.

The Gap (GAP), with a major online presence accounting for 40% of all sales, and more than 3,600 stores in 40 countries, showed net income of $274 million, translating into diluted earnings per share of 0.72. Those numbers compared favorably with year-ago figures of net income of $218 million and EPS of 0.59.

President and CEO, Richard Dickson exuded confidence, saying, "holiday is off to a strong start and we remain focused on executing with excellence in the fourth quarter. Our performance year-to-date gives us the confidence to raise our full year outlook for sales, gross margin and operating income growth."

Shares of The Gap were up nearly seven percent on Thursday and are indicated up another 17% heading into the Friday cash session. The stock, which has a very low beta, a PE ratio hovering around 10, and a 52-reek range from 18.34 to 30.59, closed Thursday at 22.04.

Shares of Ross Stores (ROST) were also being favored after the company posted net earnings of $489 million and EPS of $1.48, raising its full-year outlook to $6.10 to $6.17 per share. The stock was up more than 2.5% on Thursday and is tacking on another seven percent prior to Friday's opening bell.

Year ago returns were EPS of 1.33 on net of $447 million.

The mood wasn't quite so cheery over at Intuit (INTU), which topped estimates for the quarter, but issued lowered guidance, with some trepidation over fears of the incoming Trump administration offering a free federal government tax reporting app or simplifying the tax code to a point at which Intuit's software would be unnecessary. The company reported earning of 2.50 per share, ahead of estimates for 2.36.

Shares are down nearly three percent an hour prior to the opening bell. Intuit is a prime example of just how overpriced tech stocks have become. Yahoo Finance shows a PE ratio of 66 on this 30-year old company. Normally, such high PE ratios are reserved for startups expected to grow at exponential levels, but these days, mature companies like Apple (AAPL) and Microsoft (MSFT) are sporting PE ratios in the 30s and higher.

Elsewhere, gold continues to rally steadily following a post-election dive, hitting $2,712 overnight. Silver, which has lagged its more expensive cousin, seems to be perking up, continuing to trend close to $32 per ounce.

The rally in WTI crude oil was short-lived, topping out at $70.65 per barrel on Thursday, but slipping back below $70 Friday morning.

Futures are pointing to an even open, with equities close to the UNCH line.

At the Close, Thursday, November 21, 2024:
Dow: 43,870.35, +461.88 (+1.06%)
NASDAQ: 18,972.42, +6.28 (+0.03%)
S&P 500: 5,948.71, +31.60 (+0.53%)
NYSE Composite: 19,968.30, +219.17 (+1.11%)

Stocks Appear Losing Direction after Last Week's Losses and Minor Gains This Week; Bitcoin Approaches $100,000

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Everything is coming up roses on Wall Street Thursday morning. Even companies with net income down nearly 50% (Deere & Co, DE) are trending higher.

Topping the earnings calendar was Nvidia (NVDA), releasing third quarter results after the close Wednesday. The chip-maker earned 81 cents per share, beating estimates of 75 cents. The company's forward guidance fell a bit short of sky-high expectations, however, sending shares lower by one to two percent prior to the opening bell.

Not that a percent here or there changes any of the calculus for owning shares of a company with a $3.6 trillion market cap. Nvidia stock has gained more than 200% this year.

BJ's Wholesale Club (BJ) reported fiscal third-quarter earnings of $155.7 million. Earnings, adjusted for one-time gains and costs, came to $1.18 per share, handily topping estimates and well ahead of he same period in 2023, of 98 cents. Investors are rewarding the company's performance with a stock boost of seven to eight percent in pre-market trading.

Deere & Company (DE), maker of farm and garden equipment, saw earnings fall sharply but still beat easy estimates.

For the quarter ended October 27, 2024, Deere reported net income of $1.245 billion, or $4.55 per share, topping the analyst estimate of $3.89 per share. Revenue for the quarter came in at $11.14 billion, above the consensus estimate of $9.23 billion. Both figures represent substantial year-over-year declines, with net income down 47% and worldwide net sales and revenues decreasing 28% compared to the same quarter last year. In the same quarter in 2023, Deere earned $8.32 per share. The decline to $4.55 should be a warning sign of a company losing its mojo.

Nonetheless, shares are rising by two percent in pre-market trading.

Over the past five days, gold has rallied nearly four percent, up more than $100, to $2,670. Silver continues to be suppressed, gaining lass than two percent, currently trading on the COMEX around $31.50, though it has been as high as $31.95.

For whatever reason, bitcoin is off the charts, closing in on $100,000, having surpassed $98,000 this morning. Since the U.S. election, November 5, bitcoin has gained more than 40%.

Even oil has caught a bid, despite the third straight week of inflows according to the Energy Information Administration (EIA). Russia-Ukraine tensions are cited as the reason WTI crude is above $70 this morning. Not to throw shade on the utterly corrupt oil futures market, but there's an enormous global glut of crude that a few missile strikes aren't going to change. Besides, with Trump's inauguration just 60 days away, market dynamics are likely to veer radically, with the price of oil almost certain to decline.

There's still more than an hour before the cash market opens, so much of what's happened overnight could easily be discounted. U.S. and European markets have been a complete joke for years. That's something that is probably not going to change any time soon. However, those with an investment horizon longer than a few months might see signs of disinflationary trends headed their way. Trump's term of office, extending through 2028, is no doubt going to be very disruptive.

With that in mind, prices for everything from toilet paper to Teslas may be radically realigned. This is by no means a reccomendation to short anything, but caution should be top of mind over the next two months. The weeks before and immediately after Trump's inauguation may be a period of heightened volatility, owing to the paradigm shifts expected in how the U.S. conducts business with the rest of the world.

Dow futures an hour prior to the open are leading the advance, up 150 points, while NASDAQ, noting the weakness in NVDA, are up the least, less than 20 points to the good. S&P futures are up around 12 points, after last week's losses still shying away from the record high of 6,001 on November 11.

At the Close, Wednesday, November 20, 2024:
Dow: 43,408.47, +139.53 (+0.32%)
NASDAQ: 18,966.14, -21.33 (-0.11%)
S&P 500: 5,917.11, +0.13 (+0.00%)
NYSE Composite: 19,749.13, +30.88 (+0.16%)

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