November 2, 2018 Weekly Wrap up LIVE from the floor of the NYSE

Monday, October 29, 2018 – Friday November 2, 2018

On Monday personal income for September rose .2% on top of the prior month’s .4% gain and spending rose .4% on top of the prior month’s .5% gain.  The PCE price index rose .1%.  Markets went on wild swings on reports that the U.S. is planning on adding additional tariffs on Chinese goods if upcoming trade talks with China falter.  The Dow Industrials were down as much as 566 points before ending 245 points lower.  The S&P 500 closed .7% lower, officially in correction territory. 

On Tuesday the Case-Shiller home price index increased .1% and consumer confidence rose 2.6 points to 137.9.  Markets surged with the Dow Industrials closing up 431 points. 

On Wednesday the ADP employment report for October came in at 227,000 and the employment cost index for the third quarter rose .8%.  The EIA petroleum status report for the week ending October 26th saw crude oil inventory increase 3.2 million barrels.  Markets continued rallying with the Dow Industrials closing up 241 points. 

On Thursday jobless claims for the week ending October 27th declined 2,000 to 214,000.  Nonfarm productivity for the third quarter rose 2.2% and unit labor costs rose 1.2%.  The ISM manufacturing index for October declined 2.1 points to 57.7 and construction spending for September remained unchanged.  Markets got a boost from a positive tweet from President Trump saying he had a good conversation with China’s President and the lower than expected manufacturing report decreased 10-year Treasury yields to 3.14%.  Markets rallied with the Dow Industrials gaining 264 points. 

On Friday nonfarm payrolls for October were up 250,000, much stronger than expectations, and the unemployment rate remained steady at 3.7%.   Average hourly earnings rose .2%.  Markets opened strongly higher on the news, but then lost the gains on weakness in Apple’s quarterly report.  Now let’s take a look at some stocks.

Facebook, Inc. (NASDAQ: FB) on Tuesday announced its third-quarter results. The social media company beat earnings estimates, but its revenue missed expectations. Revenue jumped 33% to $13.7 billion while earnings per share was $1.76, up from $1.59 a year ago. Daily active users increased 9% year-over-year to 1.49 billion for September 2018 and monthly active users were 2.27 billion. Facebook shares rose 2.9% on Wednesday.

Fitbit, Inc. (NYSE: FIT) reported better-than-expected quarterly revenue and earnings, sending its shares up over 25% on Thursday. The company said revenue came at $394 million and they sold 3.5 million wearable devices in the third quarter. Smartwatch revenue grew to 49% of total revenue from less than 10% a year ago.

Apple Inc. (NASDAQ: AAPL) on Thursday announced earnings that beat Street estimates. But its shares fell in after-hour trading as iPhone sales missed estimates. The company said quarterly revenue increased 20% to $62.9 billion while services revenue hit an all-time high of $10 billion.  Quarterly earnings per diluted share jumped 41% to $2.91.  Apple’s shares fell 4.3% to $212 per share in after-hours trading.

Under Armour, Inc. (NYSE: UA) on Tuesday announced third-quarter revenue and earnings that beat analysts’ estimates, sending its shares up 24%. The retailer said third-quarter revenue increased 2% to $1.4 billion while wholesale revenue rose 4% to $914 million.  The company also raised its earnings outlook for the full year, expecting revenue to increase 3% to 4% in North American and international sales to jump 25%.

Red Hat, Inc. (NYSE: RHT) agreed to be acquired by IBM for $34 billion, sending Red Hat’s shares up by 45% on Monday.  IBM will acquire all of the cloud software company’s shares for $190 per share in cash. The deal is expected to help IBM to boost its cloud-computing business.

11 Comments
  1. Melvin R. 2 weeks ago
    Reply

    RedHat was by far the juiciest trade this week. Too bad it was a pleasant surprise for longs. Weekly Call Options $100 turns into $23,000. Sickening

  2. Viktor Figgs 2 weeks ago
    Reply

    Apple is a disappointment, I believe holiday season numbers are going to change things up, especially for share value

    • Gregory Jewell 1 week ago
      Reply

      $AAPL has moved into bargain territory. Reports of slower demand are not predictions and will be false. These are great buy-in numbers.

      • Walt Newman 1 week ago
        Reply

        $aapl hey look ma its 202.20’s again

  3. Vanessa Louie 2 weeks ago
    Reply

    $FIT, smart watches are definitely in high demand

    • Ian Bezek 1 week ago
      Reply

      $FIT failing to break resistance as expected. needs to print 6.2s to 6.4s on volume to have a shot at breaking out of this rut

  4. Aleks Ivanov 2 weeks ago
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    The only thing that can save $AAPL would be foldable screens for their iPhones. Make the iPhone a “Flip phone” with smaller footprint and more screen space and it’s stock will be off to the races again. It would sell millions and millions

    • Mike Cadenas 1 week ago
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      Where is the forward guidance tripling the top line and doubling the bottom line that is missing from $AAPL, $GOOG? Those companies did well and were pounded. The stock should have been driven down 25%

    • Ross Gerber 1 week ago
      Reply

      $AAPL is trading at a discount (valuation) to the market with still a tremendous growth ahead (think 5G) and ~$60B left in the buyback program. It is a type of “value” opportunity that Buffet gravitates towards.

  5. Matthew Neebs 1 week ago
    Reply

    Yeah I really don’t like $FB. Of all the FAANG stocks, it has has the most outstanding shares per dollar of revenue (or the lowest revenue per outstanding share), meaning price appreciation is potentially slower. Too many privacy issues.

  6. Henry Miles 7 days ago
    Reply

    the market has taken a turn, seems bullish, could it be due to the midterm election results or is it just strong earnings results?

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