Macro Events & News
The U.S. labor market showed signs of resilience in November, with a stronger-than-expected payroll increase of 227,000, surpassing economists’ forecasts. However, the unemployment rate edged up from 4.1% to 4.2%, while annual wage growth remained flat compared to the previous month, suggesting a cooling in inflationary pressures. These dynamics have bolstered expectations for a potential rate cut by the Federal Reserve in December, adding fuel to this week’s rally.
Technology stocks were the standout performers, driven by strong earnings reports from companies like Salesforce (NYSE: CRM), Okta (NASDAQ: OKTA), DocuSign (NASDAQ: DOCU), GitLab (NASDAQ: GTLB), and Rubrik (NYSE: RBRK). Positive commentary from Fed Chair Jerome Powell further supported investor sentiment. The Magnificent 7 mega-cap stocks collectively surged by over 6%, signaling renewed investor confidence in the sector’s growth prospects.
Meanwhile, energy and oil-related stocks continued to face headwinds, reflecting soft demand concerns that have weighed on the sector. As rotation into tech and mega-cap names gained momentum, traditional energy assets lagged, underscoring the sector’s ongoing challenges in the current economic climate.
The 10-Year Treasury yield dropped to 4.15%, and the VIX ended down for the week at 12.77.
For the week, major indexes were mixed: the Dow down < 1%, the S&P 500 up < 1%, and the Nasdaq up 3.1%.
Watchlist News
Intel Corp(NASDAQ:INTC) 16% ▼
Intel announced the immediate retirement of CEO Pat Gelsinger on Monday, sparking a brief rally before a sell-off that persisted throughout the week as investors weighed the implications for the company’s future. Gelsinger’s tenure was marked by significant initiatives, including the ambitious buildout of Intel’s foundry business. The lack of a named successor has added to market uncertainty, with CFO David Zinsner and CEO of Intel Products Michelle Johnston Holthaus stepping in as interim co-CEOs while the search for new leadership continues.
This move was necessary but caught investors off guard due to its abrupt nature and apparent lack of succession planning. Gelsinger’s tenure was marred by stalled progress on key initiatives, particularly the foundry business, which struggled to secure buy-in from direct competitors—an inherent challenge given Intel’s dual role as both a supplier and competitor. While initial enthusiasm greeted his departure, the optimism quickly faded as the absence of a clear successor underscored deeper uncertainties about Intel’s strategic direction. Until a new leader is in place to provide clarity and realignment, Intel may face continued headwinds. However, with the stock trading close to its tangible book value, there’s some downside protection for long-term investors.
august bear notes
Meta Platforms (NASDAQ:META) 8% ▲
Meta extended its gains last week, bolstered by a Federal appeals court decision to uphold the TikTok ban or mandate a forced sale. This development threatens its closest rival, potentially hampering TikTok’s growth in key markets where it competes with Meta. Additionally, Meta announced its next quarterly dividend, the release of the Llama 3.11 AI model positioned to rival OpenAI’s GPT-4 and Google’s Gemini, and significant investments in nuclear energy to power its AI initiatives.
Meta had a strong week, despite ongoing regulatory pressures in both Europe and the United States. The news of the TikTok ban provides a boost, though it’s worth noting that TikTok and Meta target different advertising segments, which could limit the direct impact on ad revenues. The stock also continues to trade at a price-to-earnings (P/E) ratio of around 29, below its historical average, suggesting room for valuation growth.
Beyond the past week’s positive headlines and economic data, investors may not be fully baked into the valuation Meta’s opportunities that lie in the monetization potential of Threads and WhatsApp.
august bear notes
Workday is set to join the S&P 500 as part of December’s rebalancing, a milestone that typically boosts investor sentiment due to the anticipated inflow from index-tracking funds. Prior to the announcement, the stock bounced around in the $260–$270 range, reflecting modest recovery after last week’s sell-off driven by earnings guidance that fell short of expectations.
Workday’s inclusion in the S&P 500 was anticipated, given its strong fundamentals, a solid balance sheet, and its appeal as a stable growth candidate compared to flashier names like Applovin (NASDAQ: APP). The announcement underscores the company’s standing in the tech sector, but the excitement is likely to be short-lived. Last week’s negative market reaction to lighter-than-expected earnings guidance highlighted legitimate challenges Workday faces in sustaining its growth trajectory. Additionally, with new leadership at the helm, there’s uncertainty around its ability to execute on strategic promises, leaving investors cautious despite the near-term boost from the S&P 500 inclusion.
august bear notes
