Macro Events & News
There seemed to be a rotation out of mega-cap stocks, which have outperformed recently, into cyclicals, as evidenced by the Dow outperforming the other major indexes. This shift was likely influenced by a wave of regulatory news targeting mega caps, most notably Alphabet, which was reportedly asked to divest its Chrome browser.
Meanwhile, the 10-Year Treasury yield saw little movement, dipping to 4.41%, and the VIX settled at 15.24 after spiking above 18 earlier in the week.
For the week, all major indexes ended higher: the Dow up 1.9%, the S&P 500 up 1.7%, and the Nasdaq up 1.5%.
Watchlist News
Alphabet (Nasdaq:GOOG) 5% ▼
Department of Justice (DOJ) pushing antitrust cases against big tech names before the new more business friendly administration. DOJ asking judge to force the sale of Chrome browser.
This appears to be a last-ditch effort by an outgoing administration to target large, profitable tech companies as part of its broader agenda. The legal battle is likely to be protracted, with a potential shakeup in the DOJ under the incoming business friendly administration. While the heavy selling presents a compelling entry opportunity, downward pressure may persist for the near term as the situation unfolds.
august bear notes
GlobalFoundries (Nasdaq:GFS) 3% ▲
GlobalFoundries announced securing $1.5 billion in funding from the CHIPS and Science Act. The investment will be allocated to expanding production capacity at its fabrication facilities in New York and Vermont. While this is a significant development for the company, UBS Securities cautioned about potential oversupply risks in the semiconductor industry, based on recent research. UBS maintains a Neutral rating on GlobalFoundries stock, with a price target set at $47.
The market’s reaction was relatively muted, as the stock had already sold off the previous week due to concerns over potential oversupply and uncertainty about securing government funding ahead of the next administration. Additionally, the mixed market response to Nvidia’s recent performance likely contributed, with investors reassessing expectations amidst signs of slowing AI growth. Despite this, there could be further upside as the U.S. government prioritizes support for domestic chipmakers.
august bear notes
Meta (Nasdaq:META) <1% ▲
Meta’s stock faced significant downward pressure last week, driven by escalating regulatory and legal challenges. German authorities reportedly pushed for stricter privacy-related penalties, and in India, Meta was fined approximately $25.4 million for privacy violations linked to WhatsApp’s 2021 policy update.
As stated in the prior week, regulatory actions are nothing new for Meta, which has shown resilience by adapting and even thriving in similar situations (e.g., navigating IDFA changes). The stock initially rebounded well from the previous week’s losses but surrendered those gains following fresh regulatory reports.
august bear notes
Nvidia (Nasdaq:NVDA) <1% ▲
Posted strong Q3 2024 results beating the top and bottom line expectations. Guidance for Q4 was slightly above the expectations. Gross margins were down slightly at 74.6%. Trading action was indecisive, up Thursday but surrendered gains on Friday.
This could be a promising entry point, but it’s worth monitoring at the current level. The AI-driven euphoria may cool off as earnings season winds down, the holiday season approaches, and investors begin focusing on year-end tax planning.
august bear notes
Oppenheimer and Scotiabank both expressed optimism about the stock, issuing lofty price targets above $300. They cited a stable market environment and growing confidence in customer spending as key factors supporting their bullish outlook. Additionally, Gartner recognized the company as a leader in Financial Planning Software for the third consecutive year, reinforcing its strong market position. Earnings are scheduled for release after the market close on Tuesday, November 26.
Workday has gained approximately 12% over the past few weeks as it approaches its earnings report. The company stands out as a solid SaaS provider, delivering healthy growth and tapping into an expanding total addressable market (TAM). Additionally, it remains a strong candidate for S&P 500 inclusion during the December rebalance.😉
august bear notes
