Markets Hold Their Breath as Election Looms

Last Week’s Top Five Market Winners

Nasdaq Stock Market (NASDAQ)

On the Nasdaq Stock Market, some strong gains were made by Mirati Therapeutics Inc. (MRTX), Exact Sciences Corp. (EXAS), Dunkin Brands Group Inc. (DNKN), Co-Diagnostics Inc. (CODX) and ACADIA Pharmaceuticals Inc. (ACAD).

  • Releasing positive preliminary data from trials of an experimental drug used to treat lung cancer, Mirati Therapeutics Inc. (MRTX) stocks surged ahead 20.50% week on week.
  • Exact Sciences Corp (EXAS) saw strong weekly growth ( 12.88%) off the back of acquiring Thrive Earlier Detection and some solid third quarter results.
  • News of an acquisition offer from Inspire Brands saw Dunkin Brands Group Inc. (DNKN) stocks increase by 12.30%.
  • Co-Diagnostics Inc. (CODX) stocks improved by 7.62% week on week, although the cause behind this growth is currently unclear.
  • The value of ACADIA Pharmaceuticals Inc. (ACAD) stocks grew by 7.06%, although the cause behind this growth is currently unclear.

New York Stock Exchange (NYSE)

The last seven days saw some positive results over on the New York Stock Exchange for Hertz Global Holdings Inc. (HTZ), Oasis Petroleum Inc. (OAS), Community Health Systems Inc. (CYH), Inphi Corp (IPHI) and Vipshop (VIPS).

  • It was a strong week for Hertz Global Holdings Inc. (HTZ) with stock prices jumping 155.49%, despite news that a delisting application is set to be filed by the NYSE.
  • Oasis Petroleum Inc. (OAS) stock prices grew by 41.18% following news that the company had not only filed for Chapter 11 bankruptcy, but had also entered into a restructuring support agreement with many of its creditors.
  • Strong third quarter results saw Community Health Systems Inc. (CYH) stocks increase by a solid 26.48% week on week.
  • Inphi Corp. (IPHI) stocks experienced a strong 18.12% growth off the back of an acquisition bid from Marvell Technology Group Ltd. (MRVL).
  • Vipshop (VIPS) stocks saw a week on week improvement of 12.82%, although the cause behind this growth is currently unclear.

Last Week’s Top Five Market Losers

Nasdaq Stock Market (NASDAQ)

The Nasdaq Stock Market’s weekly performance saw Goodyear Tire & Rubber Co. (GT), DexCom Inc. (DXCM), Overstock.com, Inc. (OSTK), Bed Bath & Beyond Inc. (BBBY) and 1 800 FLOWERS COM (FLWS) all fare worse than expected.

  • Goodyear Tire & Rubber Co. (GT) stocks fell -24.73% due to a wider market sell-off driven by continued COVID-19 concerns.
  • The value of DexCom Inc. (DXCM) also fell (-22.24) thanks to the wider market sell-off.
  • Following several months of solid growth, Overstock.com, Inc. (OSTK) stocks fell by -21.95% last week.
  • Bed Bath & Beyond Inc. (BBBY) stocks fell -21.92% off the back of news of a share repurchase plan and the presentation of the company’s three-year targets. Although both announcements were intended to be positive, investors did not respond to the news as expected.
  • Stock value decreased by -21.78% for 1 800 FLOWERS COM (FLWS) after results released by the company indicated that the boost to online shopping caused by COVID-19 may soon peter out.

New York Stock Exchange (NYSE)

The week’s losers on the New York Stock Exchange included Blue Apron Holdings Inc. (APRN), GameStop Corp. New (GME), Renren Inc. (RENN), 3D Systems Corp. (DDD) and Gol Linhas Aereas Inteligentes SA (GOL).

  • Blue Apron Holdings Inc. (APRN) stocks fell by -33.44% following the release of the company’s third quarter results and higher than average share sell-offs.
  • Unveiling a suite of new financing services, GameStop Corp New (GME) saw a -30.20% drop in stock value.
  • Renren Inc. (RENN) stocks fell by -29.66%, although the cause of this decline is currently unclear.
  • A -25.72% week on week fall was experienced by 3D Systems Corp. (DDD) after an analyst began questioning why the stock had rallied in recent times.
  • Gol Linhas Aereas Inteligentes SA (GOL) stocks fell -22.52% week on week, although the cause of this decline is currently unclear.

Highlights and Lowlights

Cruise companies sailing upward against market currents

Cruise liners Carnival (CCL), Royal Caribbean (RCL) and Norwegian Cruise Line Holdings (NCLH) all defied the market trends this week in a shocking turn of events as the CDC announced a plan that will eventually lift its previous no sail order. The no sail order has kept cruise ships operating in US territorial waters out of action for most of this year and was expected to be extended once again off the back of renewed cases worldwide.

The CDC’s plan to reopen the industry, which includes a test period of crew only exercises to verify that the ships have the capacity to function in a Covid safe manner will inevitably come with many challenges for operators. The market is reacting favourably to the news: Carnival jumped 6% on Friday amidst an otherwise retreating market, with Royal Caribbean and Norwegian not far behind, going up 5%. It remains to be seen whether customers will flock back in pre-Covid numbers, as the CDC is still strongly advising against boarding cruise ships.

Alphabet soars after smashing earnings and revenue expectations

Parent company of Google, Alphabet (GOOGL) absolutely smashed all expectations with the release of the company’s third quarter earnings report that revealed a lot for investors to get excited about. The stock jumped an impressive 9% in after hours trading following the release of the figures. Google now joins fellow digital advertising platforms SNAP and Pinterest in posting excellent figures after the initial pullback on customer spending due to the Covid-19 pandemic, showing that not only are these platforms resilient, but that the industry itself has adapted to the change in consumer habits in a successful manner. Here are some of the expected figures that Alphabet surpassed :

  • Earnings per share are at $16.40 as compared to an expected $11.29.
  • Revenues outperformed expectations to the tune of $46.17 billion vs $42.90 billion.
  • Google cloud nudged up $3.44 billion in comparison to the expected result of $3.32 billion.
  • Youtube ads were another standout performer clocking in $5.04 billion vs an estimated $4.39 billion.
  • Traffic acquisition cost came in at $8.17 billion as compared to an expected figure of $7.66 billion.

General Electric posts unexpected third quarter profit

One of the few stocks to end the week on a positive note, General Electric saw a strong gain of 8% off the back of better than anticipated third quarter financial results that included the very welcome news that the company would be returning a small profit of $0.06 per share. It is not all sunshine and roses for GE, however, as the company also reported a drop in revenue of 17% as compared to year ago levels, as well as a fall in organic sales of 12%.

Tech giants lose ground despite profits

During Friday’s stock market retreat, many of the big name technology companies took a hit, with Twitter dropping by 21% to make it the worst-performing stock in the S&P 500. Twitter was not alone, however, since Apple dropped 5% after a delayed release led to poorer than expected iPhone 12 sales, and was joined by both Facebook and Amazon, both of which also took a sharp downhill turn. These results are particularly concerning as many of these companies have just released earnings reports that show a profit.

Oil companies feel the Covid pain

The two largest integrated oil companies in the US, Exxon and Chevron, both recorded losses for their third quarter this week as the continued disruption to operations due to the pandemic took their toll. Exxon dropped 18 cents per share, which while lower than the expected loss of 25 cents (according to analysts surveyed by Rfinitiv), was enough to see their stock price fall. Chevron managed to earn 11 cents per share off the back of some fairly aggressive cost cutting strategies and only dropped 0.4% as a result.

What’s in Store for the week?

This week brings with it the long-awaited US election, and with the “stuck in a holding” pattern, as we wait to see what the final result will be, we can also expect things to move very quickly as the day approaches. Interestingly, history tells us that no sitting president has been reelected with a stock market this low, since the Eisenhower government, and additionally, the presidential predictor (which has correctly called 88% of all election results since 1944) has pointed to, but not guaranteed, a Biden victory. These indicators aside, this is a very closely watched election and one that will very much affect the perceived strength of the economy going forward.

The resurgence of Covid-19 throughout Europe will once again be on the minds of many investors this week as the UK heads into a second lockdown and we continue to see rising case numbers across both France and Italy, as well as ever-increasing domestic case numbers within the US. This level of global uncertainty will inevitably continue to affect the domestic stock market going forward, and in the absence of a vaccine, the problem is unlikely to be resolved in the near future.

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