Is Apple going to challenge Tesla in the EV world? A stimulus deal has finally been agreed on! CarMax Reports earnings before the bell. Let’s talk about this and other stock market news
~Very Long Post~
Hello everyone and Good Morning! So, let’s start with the recap of yesterday as we saw a very bad open after the UK news, but things did turn around as the big 3 indexes mostly recovered, with the Nasdaq Composite finishing down just 0.10% for the day, the Dow Jones even posting a small gain finishing up 0.12% while the SP500 lost 0.39% dragged down by the recent addition, Tesla, which finished more than 6% down for the day. We also saw the VIX opening very high and was up more than 30% at one point before eventually finishing the day around the 25 levels, as the new strain in the UK caused some panic selling and overreactions in the stock market in my opinion. Here is a short-clip from the Admiral Brett Giroir, the US HHS assistant secretary sharing the facts on CNN yesterday, as there is a lot of misinformation going on.
So, he gave us reassurance, and I don’t believe there is anything to dispute here, as I have done a lot of research yesterday on the matter, as this strain has been circulating for 3 months already and is not something new with the only point of concern being that this one is more transmissible and has become the most common in the UK. This should not impact the effectiveness of the vaccines and has not been proven to be more lethal than any other strain. So, hopefully the vaccines become more available as fast as possible so that we can get past this whole thing already.
Yesterday more than 60% of the companies were losing ground on above average volume, as companies have started to have some retracements to the 50-day moving averages. Only one of the 11 sectors in the SP was gaining yesterday, with Financials gaining 0.81%, while Energy, Real Estate and Utilities finished the day down more than 2% as growth companies outperformed the value plays yesterday, especially the mid and small-caps.
Here is the HEAT MAP from yesterday, as there was a whole lot of red going on, with only the biggest tech companies in the world having some small gains, with Microsoft & Apple up more than 1% while Amazon & Google also finished barely up for the day. We Also got the US banks which did pretty good following the FED decision to allow share buybacks again and Nike also surging after terrific earnings. We also saw some of the biggest losers in the oil & gas industry joined by Tesla which saw a significant pullback after the SP500 inclusion.
Meanwhile, the US Congress finally passed a $892B bill after many months of gridlock that is expected to be signed into law by Trump. The bill will include $600 payments to most American. The bill which is more than 5K pages long also includes a federal spending budget of over $1.4T and has a net cost of only $350B in relief spending with the rest coming from unspent money from the previous bill.
Here are the most interesting economic reports coming today, with the GDP revision, consumer confidence index and home sales coming early in the morning.
We also get a single big earnings report today, coming from CarMax which will show us how the second-hand car market is doing, this may impact other stocks like Carvana and even car manufacturers. So, will writing this, CarMax released the earnings and delivered a beat on the top and bottom line but underwhelmed on comparable store sales which were down 0.8% vs the 4.1% increase expected. I will come back tomorrow and discuss more about this after I get into the earnings report more in-depth.
In some other stock market news, GM has landed 10K pre-orders for the new Hummer EV for the Edition 1 model which will be listed well above the $100K mark and will start production next year, this is another manufacturer that is going to keep putting more and more pressure on Tesla’s EV market share.
Tesla also continued to drop yesterday after reports that Apple is moving forward with a self-driving car by 2024 that would include its own breakthrough battery technology. Apple has started this project in 2014 but this had low interest from the company in the past years, has recently been brought back into focus, as they are targeting a unique mono-cell battery design that could radically reduce the cost and increase the range of the vehicle. Though I believe this is very unlikely to happen, as Apple is more likely to license this kind of technology, or maybe they will try to rely on some kind of a manufacturing partner rather than start manufacturing their own cars
We also saw the whole solar energy stock rallying again after reports that the spending bill will include $35B in energy R&D programs, with an extension of the Tax Credit for solar & wind power.
While another stay-at-home winner, Peloton just agreed to acquire Precor for $420M as they seek to expand the market share and the manufacturing capabilities to keep up with the big demand which has caused delays.
Another recent stock market favorite also received a one-year $114M option contract from the US army. This helped pushed Palantir almost 10% up in regular trading and more than 2% again in after-hours.
Let’s hope for a good day in the market as the FUTURES seem to be mixed right now, with the Nasdaq Composite leading the way, as the stay-at-home stocks are back in flavour alongisde this new virus strain, but who knows how long this will last…
Thank you everyone for reading! Hope you enjoyed the content! Be sure to leave a comment down below with your opinion on the stock market!
Have a great day and see you next time!
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