The stock market lumbered through another tame session at the broader-index level Thursday, but a few exciting individual moves in Big Tech were just enough to get the S&P 500 and Nasdaq Composite back into record territory.
Initial unemployment claims for the week ended Nov. 13 didn’t seem to affect stocks much. The week’s 268,000 filings were just barely more than expected (260,000), but also slightly lower than last week’s upwardly revised 269,000.
More encouraging was the Philly Fed, which showed activity jumping to 39.0 in November from 23.8 last month (any reading above zero is indicates growth).
“The Philly Fed index was the second regional survey this week to blowout expectations,” says Michael Reinking, senior marketing strategist for the New York Stock Exchange. “The regional surveys are the first pieces of November data and this suggests that next Tuesday’s Markit PMI data could also be strong.”
However, a couple mega-cap tech moves were the strongest drivers of Thursday’s index action.
Apple (AAPL, +2.9%) shot to record highs amid a Bloomberg report that the company is accelerating the development of a full self-driving electric vehicle, with a possible model reveal by 2025, citing people familiar with the matter. And chipmaker Nvidia (NVDA, +8.3%) resumed its red-hot run after reporting a 50% year-over-year improvement in Q3 revenues and better-than-expected earnings thanks to a big quarter from its gaming and datacenter products.
That resulted in another standout daily performance for tech, which in the bigger picture has broken out to fresh relative highs for the first time since September 2020, according to Scott Brown, technical strategist for LPL Financial.
“Technology continues to be a key enabler of higher productivity and home to many of the fastest-growing companies,” he says. “Despite topping all sectors with 9% earnings growth in 2020, earnings growth this year is on track to exceed 30%.”
The S&P 500 gained 0.3% to a record 4,704, and the Nasdaq finished up 0.5% to a new high of 15,993. The Dow Jones Industrial Average, however, slipped 0.2% to 35,870; Cisco Systems (CSCO, -5.5%) pulled on the industrial average after delivering weak quarterly guidance.
Other news in the stock market today:
The small-cap Russell 2000 dipped 0.6% to 2,363.
U.S. crude futures rose 0.8% to $79.01 per barrel.
Gold futures slipped 0.5% to settle at $1,861.40 an ounce.
The CBOE Volatility Index (VIX) climbed 1.6% to 17.40.
Bitcoin dropped to roughly one-month lows, declining 3.9% to $57,998.79. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
It was a red-hot market debut for Sweetgreen (SG). The Los Angeles-based fast-casual salad chain opened today at $52, well above last night’s initial public offering (IPO) price of $28 per share – and more than double the expected range of $23 to $25 per share. SG’s opening price gave the company a market value of more than $5.5 billion, though it eventually closed the day just shy of here at $49.50. There’s still a handful of names waiting to go public in the final weeks of 2021, capping off what has been a big year for IPOs.
Macy’s (M) was a big winnerpost-earnings, with the retail stock surging 21.2%. In its third quarter, the department store reported higher-than-expected adjusted earnings per share of $1.23 on $5.4 billion in revenue. M also said comparable sales surged 35.6% year-over-year on an owned-plus-licensed basis, while digital sales surged 19%. Still, CFRA Research analyst Zachary Warring maintained a Hold rating on the stock. “We like the improvements to the balance sheet and business model but expect FY 22 to be a peak year for Macy’s,” he wrote in a note.
2022: The Year of the Stock Picker?
As we head into the final innings of 2021, Morgan Stanley Research is lukewarm about the 12-month risk/reward proposition offered by the broader indexes, but they do think investors can find opportunity in individual equities.
Even then, “while our primary theme for 2022 is to focus more on stocks than sectors and styles, one can’t ignore them. We go into year-end favoring earnings stability and undemanding valuation given our view for a tougher operating environment and higher long-end rates,” the team says in its 2022 outlook.
That has Morgan Stanley overweighting the healthcare sector, which stands out for its defensive qualities and reasonably priced growth. No small wonder there. Healthcare seems to offer something to everyone, from blue-chip pharmaceutical companies with ample dividends to growthy biotechnology firms.
But if you’re looking at the sector with a specific eye toward the new year, look no further. We’ve begun our annual dive into the market’s various slivers with the best healthcare stocks for 2022, where COVID-19 should still be a factor for some potential winners … but not all of them.
Kyle Woodley was long NVDA as of this writing.