Sanjay Mehrota, CEO, Micron
Scott Mlyn | CNBC
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After a sluggish start to the week, the S&P 500 put together three good sessions in a row and rebounded close to its all-time highs. The highlights of the week from the corporate side were the fantastic earnings and industry commentary from Micron (UM), and the better-than-expected figures of Nike (NKE). In the United States, President Biden has rejected the idea that the country should enter into March 2020-type closures to combat the increase in Covid-19 cases. And seasonally, the markets entered a generally profitable period for investors with the start of the Santa Claus rally.
Every S&P sector closed higher during the shortened trading week, but there was leadership in some areas. Some of the sectors that were hardest hit in the past week have returned with a vengeance, with consumer discretionary, technology, energy, communications services and industrials all posting gains of over 2%. Indeed, consumer discretionary (aided by Tesla) and tech each recorded gains of over 3%.
The higher swing in technology was important for such a battered industry. One of the catalysts for the gains in the tech sector this week has been earnings and Micron’s comments, of course. As a memory and storage supplier to the semiconductor industry, Micron is exposed to many different technology groups such as data centers, mobiles, computers, graphics, and automobiles.
Healthcare, materials and financials were in the middle of the pack, each gaining about 1.5%, plus or minus 0.15%. And the more defensive sectors, consumer staples, real estate and utilities, each posted modest gains of less than 1%.
Here’s a quick look at some of the broader market metrics we like to watch: The US dollar index was roughly flat on the week at 96. Gold was roughly flat on the week, trading at about $ 1,810. WTI crude prices rebounded above $ 73 as the market reassessed the impact the omicron variant would have on global demand. And the yield on the 10-year Treasury rose to almost 1.50%.
No portfolio company reported this week.
In addition to the results, we received several key macroeconomic updates on Wednesday and Thursday:
–Gross Domestic Product (GDP): + 2.3% QoT (3Q21) vs. + 2.1% estimate
-Core PCE YoY (3Q21): + 3.6% YoY
-Seasonally adjusted annual rate (SAAR) of sales of existing homes in November: + 1.9% MoM vs. + 3.0% estimate; + 2.0% year-on-year
-Durable goods orders in November: + 2.5% MoM vs. + 1.8% estimate
-Order of basic equipment goods: -0.1% against + 0.7% estimate
-Personal consumption expenditure for November (PCE alias “Personal expenditure”): + 0.6% MoM vs + 0.6% estimate
-Personal income in November: + 0.4% MoM vs. 0.4% estimate
-November Core PCE: + 4.7% year-on-year vs. + 4.5% estimate
-Initial unemployment claims +205,000 against +205,000 estimate
– Moving average over four weeks: +206,250 (+2,750 compared to the previous week)
-Sales of new houses in November SAAR: 744,000 against 770,000 estimate; -14.0% year-on-year
What we’re watching for ahead:
None of the portfolio companies are expected to report earnings next week. It will be pretty quiet with just one company expected to report:
Close: Aliments Cal-Maine (CALM)
On a macroeconomic level, in addition to keeping an eye on the geopolitical sphere, we will be monitoring the following releases (all weather ET):
10:30 Dallas Fed Index
9:00 a.m. S & P / Case-Shiller House Prices
10:00 Richmond Fed Index
8:30 Wholesale inventories
10:00 am Pending house sales
8:30 am Unemployment claims
9:45 Chicago PMI
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