Week ending November 8th, 2024
From Wall Street to Main Street
Highlights from the past week
| Market / Macro Economic Summary The post-election party comes to Wall Street! Markets certainly had a couple of memorable days as the Dow Jones Industrial Average closed a staggering 4.61% up on the week, the S&P 500 was higher by 4.66% and the Nasdaq would not be outdone, rising 5.74%. While the elections and the expected lower regulatory environment played a large role, we also got a 25 basis point reduction by the Federal Reserve. I continue to emphasize each week that lots of signals in the economic data point towards a continued, supportive background for good equity returns. The Federal Reserve is poised to continue to keep rates here or lower them as inflation is no longer a major concern. The likelihood of lower taxes and deregulation under president-elect Trump provides the backdrop for a business-friendly environment. More importantly, earnings reports continue to come in above-expectations and guidance for future quarters tend to be revised higher. Of the 500 companies that make up the Standard & Poor’s Index (S&P), 90% have reported already which lead me to have a good sense of where markets are headed. On the whole, 77% of the earnings reports are beating estimates by an average of 6%. Although markets are near or at all-time highs, I do not feel like a recession or downturn is coming soon and therefore remain constructive on market conditions and stock returns. Company Specific / Micro Economic Summary Berkshire Hathaway (BRK.B) Shares fell 2% as CEO Warren Buffett reported a mixed quarter. Earnings per share were a miss as the company earned $7,019 per Class A Shares when estimates called for $7,090. Revenues of $93 billion did beat expectations of $83.3 billion. The cash hoard at Berkshire now sits at over $300 billion but the firm chose not to do any buy-backs of its shares. It’s still unclear why Warren remains sidelined with all that cash while the markets continue to rise. Palantir Technologies (PLTR) Shares of the AI-driven company rose 23.76% on the day as it reported a strong quarter and delivered on high expectations for growth. Earnings per share came in at 10 cents, one penny ahead of expectations. Revenue of $726 million came in better than the calls for $704 million. CEO Alex Karp noted revenue grew 44% year over year and 19% sequentially/ quarter over quarter. U.S. commercial revenue grew 54% and governmental revenue grew 40%. He also noted the company closed over 104 deals over $1 million and customers grew 39%. I had noted last quarter that their “bootcamps” led strongly towards client acquisition and this quarter reaffirmed that. Qualcomm (QCOM) Shares were up 6% as the chip giant reported a strong quarter. Earnings per share of $2.69 came in well above the expectations for $2.57. Revenue of $10.2 billion also came in ahead of the Wall Street estimates for $9.93 billion. “We are pleased to conclude the fiscal year with strong results in the fourth quarter, delivering greater than 30% year-over-year growth in EPS,” said Cristiano Amon, President and CEO. The Trade Desk (TTD) Shares fell 5% as the company reported a strong quarter. Revenue grew 28% and came in at $628 million when the estimates called for $621 million. Earnings per share of 41 cents also beat the calls for 39 cents. Jeff Green, co-founder and CEO said “As we enter our busiest time of year and look ahead to 2025, we have never been in a better position to capture greater share of the $1 trillion advertising TAM (total addressable market). |
| Parting Thoughts One thing I’d like my clients to know or keep in mind, as the markets obviously took the elections and interest rate decline as good news, is that I fear the tariffs that President-elect Trump has in mind. Should he come through with that and the mass deportations….this will have an inflationary affect on our economy. I’ll keep an eye on this and hopefully the changes are moderate and not too drastic from where his recent rhetoric has been. We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Wealth/Fiduciary Advisor |