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Market news
The Standard & Poor's 500 Index declined 2.68 percent, while the Nasdaq Composite Index dropped 3.37 percent. The Dow Jones Industrial Average ended 0.94 percent lower. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 1.95 percent.¹ ²
Market Recap: Bears Take a Bite Out of Tech
Stocks declined during an unusually volatile week as midterm election results shifted control of Congress and markets responded.
The Standard & Poor's 500 Index declined 2.68 percent, while the Nasdaq Composite Index dropped 3.37 percent. The Dow Jones Industrial Average ended 0.94 percent lower. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 1.95 percent.¹ ²
A Volatile Week, to Be Sure
Stocks were mixed to start the week, kicking off November with a continued rotation out of technology stocks and into more defensive names.³ ⁴
Markets then jumped midweek as investors believed a decisive midterm election result would help reduce political uncertainty. Economically sensitive stocks led the rally, while semiconductor stocks and other technology names trailed. The Dow Industrials rose more than 3 percent, marking its best day in over 1½ years.⁵
However, stocks came under steady pressure on Thursday, with technology shares leading all three major market averages lower. Investors continued to rotate out of the AI trade as anxiety grew about what might come next. The Nasdaq dropped 5½ percent, while the S&P 500 slid 4.4 percent.⁶
The week ended on a positive note, with markets moving higher on Friday as investors welcomed a better-than-expected jobs report, helping to lift investor sentiment.
Connor's Insights
Price and Fundamentals Can Stay Disconnected for a Long Time... But Not Forever
Connor Mahoney
Investment Advisor Representative
The technology sector continues to dominate the earnings growth trajectory despite its recent sharp decline and underperformance relative to other sectors.
If earnings continue to grow while stock prices continue to fall, a significant value opportunity could emerge.
We discussed a post last week that we thought was both funny and surprisingly accurate:
"I can't shake the feeling that selling your high-beta tech stocks, already down a lot, to pile into low- or no-growth consumer staples names trading at 30–100 times earnings might not be so smart either."
There's certainly something to think about there.
Coogle's Corner
The Spy Who Loved Me
Bill Coogle
Vice President
Remember that classic James Bond movie?
Featured Story: Nvidia and Jensen Huang
Nvidia's board has reportedly launched an independent investigation into allegations that CEO Jensen Huang was targeted by a foreign intelligence operation following a reported relationship with a business executive alleged to have ties to Chinese intelligence.
Huang reportedly acknowledged personal misconduct and indicated that he would cooperate with the investigation. At this point, it remains unknown whether any sensitive company information was shared.
What Does This Mean for Nvidia?
Near term: The uncertainty could increase volatility and weigh on Nvidia's valuation. We are not surprised to see the stock trading lower this morning.
Nvidia has already experienced a difficult decline following its failed breakout to an all-time high. The broader technology sector has also been under immense pressure, both before and after the election.
Further disclosures, regulatory scrutiny, or questions about Huang's future could amplify the market's reaction.
Wall St. Tip
Oil, Inflation, and the Boy Who Cried Wolf
Oil prices fell Monday amid renewed diplomatic efforts involving Iran.
But haven't we heard that negotiations were underway about 150 times already?
Until we actually see something concrete, this continues to feel like a case of the boy who cried wolf.
Energy prices have been one of the starting points in the ongoing game of hot potato involving inflation expectations and interest rate expectations.
Oil prices have moved sharply lower over the past week or so, but that hasn't done much to help the broader market.
Why?
Because the decline appears to be more technical in nature, while several other significant overhangs continue to weigh on investor sentiment.
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