US investors remain as jumpy as everyone else as they grapple with the Omicron variant and the impact on the economy that remains as clear as mud.
The new Covid strain appears to be less lethal than its predecessors, news that encouraged JPMorgan Chase analysts to talk up positions in stocks dependent on the reopening of the US economy, as well as commodity stocks.
‘We view the recent sell-off in these segments as an opportunity to buy the dip in cyclicals, commodities and reopening themes, and to position for higher bond yields and steepening,’ said a research note, according to Bloomberg.
| US markets this week | ||
| S&P 500 | Nasdaq Composite | |
| -2.54% | -1.75% | |
| Dow Jones | Russell 2000 | |
| -4.17% | -3.93% | |
| Source: Google Finance, prices at 7pm UK time, 3 December | ||
Since the outbreak of the variant, US markets have been declining, until Thursday (2 Dec) when Wall Street went bananas. The Dow Jones rallied 1.8% on the day while the S&P 500 ended up 1.4%, only to see those gains largely wiped out on red Friday (as of the UK close), with tech, financial, energy and consumer discretionary stocks bearing the brunt of the selling.
Adding to the volatility was data that showed US job growth slowed considerably in November, with benchmark US bond yields falling to a more than two-month low. Expect the skittishness to stick around until scientists and markets get a better steer on Omicron, appears to be the wider message.
Stock of the week: Apple
Reports emerged this week that Apple has told components suppliers that demand for its iPhone 13 line-up has slowed, possibly a sign that some potential customers have decided not to upgrade this Christmas given the shortage of handsets.
This followed a 10 million cut to sales estimates in October, yet the stock has shown remarkable resilience, chalking-up a new all--time high of $165.30 on Tuesday (30 November). Over the past month Apple shares have gained nearly 6% versus 3.2% and 4.7% declines for the S&P 500 and Nasdaq Composite.
Reported this week: DocuSign
The software stock plunged 40% after the company issued lower fourth-quarter sales guidance than anticipated, spooking investors that its growth may be drying up. DocuSign gave a range of $557 million to $563 million, versus consensus analyst estimates of $573.8 million. DocuSign reported Q3 revenue of $545 million and adjusted earnings of $0.58 per share, beating analyst estimates on both earnings and revenue.
Reported this week: Kroger
Shares in Kroger surged over 11% on 2 December after the Ohio-based food retail chain reported better-than-expected earnings in the third quarter and lifted its annual sales and profit forecasts, prompting several analysts to raise their one-year price targets. The retailer, which operates over 2,500 supermarkets and multi-department stores throughout the United States, said its identical sales without fuel increased 3.1%, two-year stack increased 14.0% and digital sales two-year stack grew 103%.
| Big movers this week | |||
| Pfizer | 6.1% | GameStop | -21.2% |
| Quest Diagnostics | 5.1% | Forest Laboratories | -17.1% |
| HP | 5.1% | Macy's | -17.1% |
| Western Union | 3.8% | Helmerich & Payne | -16.1% |
| Abbott Laboratories | 3.6% | Carnival Corp | -15.6% |
| Prices at 7pm UK time, 3 December | |||
