Market Overview

The Nasdaq Composite reached a record close, rising by 0.8%. The S&P 500 increased by 0.2%, or approximately ten points. This upward movement was largely driven by mega caps and chipmakers. The PHLX Semiconductor Index (SOX) closed 2.3% higher, while the Vanguard Mega Cap Growth ETF (MGK) settled 0.9% higher. Alphabet (GOOG, Financial) was a significant winner, gaining 1.7% ahead of its earnings report. However, market internals indicated a negative bias, with decliners outnumbering advancers by a 2-to-1 margin at the NYSE and by a 4-to-3 margin at the Nasdaq. The Dow Jones Industrial Average fell by 0.4%, and the Russell 2000 decreased by 0.3%.

Treasury Market Activity

Treasury market activity reflected cautious buying, influenced by a strong Consumer Confidence report for October. Yields initially moved higher but eventually settled close to previous levels after a robust $44 billion 7-year note sale. The 10-year yield remained unchanged at 4.27%, while the 2-year yield decreased by two basis points to 4.12%.

Earnings Reports

The market was also processing mixed earnings results. D.R. Horton (DHI) fell 7.2%, Ford (F) dropped 8.4%, and Pfizer (PFE, Financial) declined 1.4% after reporting their results. Conversely, McDonald's (MCD) saw a slight decrease of 0.6%, while V.F. Corp (VFC) surged 27.0% and Royal Caribbean (RCL) rose 3.2% as earnings-related winners.

Year-to-Date Performance

• Nasdaq Composite: +24.7% YTD
• S&P 500: +22.3% YTD
• Dow Jones Industrial Average: +12.1% YTD
• S&P Midcap 400: +13.0% YTD
• Russell 2000: +10.4% YTD

Economic Data Review

• August FHFA Housing Price Index increased by 0.3%; prior was revised to 0.2% from 0.1%
• August S&P Case-Shiller Home Price Index was 5.2% (consensus 5.1%); prior was 5.9%
• October Consumer Confidence was 108.7 (consensus 99.0); prior was revised to 99.2 from 98.7

The key takeaway is the broad-based increase in confidence across all age and most income groups, with a notably optimistic outlook on future business conditions, which could support consumer spending.

Today's News

Advanced Micro Devices (AMD, Financial) experienced a 5% decline in its shares during extended trading following its third-quarter earnings report. The semiconductor company reported earnings of $0.92 per share with revenue of $6.82 billion, up 18% year-over-year. The data center segment showed remarkable growth, increasing 122% to $3.5 billion, driven by AI processors. However, the gaming and embedded segments saw revenue drops of 69% and 25%, respectively, leading to investor concerns despite meeting analyst expectations.

Pfizer (PFE, Financial) shares faced pressure despite surpassing Q3 financial expectations and raising guidance. The pharmaceutical giant reported a topline of $2.8 billion, reflecting a 32% year-over-year growth, largely attributed to its COVID franchise, including Paxlovid and the Comirnaty vaccine. Excluding these, the topline grew only 14% operationally, raising concerns about the performance of its non-COVID portfolio, which includes drugs like Xeljanz and Ibrance.

Alphabet (GOOG, Financial)(GOOGL, Financial) shares rose 1.84% after the company reported strong Q3 results, with GAAP EPS of $2.12 and revenue of $88.27 billion, beating estimates. The company's revenue grew 15% year-over-year, driven by Google Services and Google Cloud, which saw a 35% increase. The robust performance across its platforms, including AI solutions, contributed to the positive investor sentiment.

Visa (V, Financial) reported impressive fiscal Q4 results, with non-GAAP EPS of $2.71 and revenue of $9.62 billion, both exceeding analyst expectations. The company saw a 12% increase in net revenue, driven by growth in payments and cross-border volumes. Visa also announced a 13% increase in its quarterly dividend, reflecting confidence in its ongoing financial performance.

OpenAI, backed by Microsoft (MSFT, Financial), has shifted its strategy to designing in-house chips for AI applications, collaborating with Broadcom (AVGO, Financial) and Taiwan Semiconductor Manufacturing Company (TSM, Financial). This move comes as demand for Nvidia's (NVDA) GPUs surges, prompting OpenAI to seek alternatives. Broadcom's shares rose 3.5% following the announcement.

Chipotle Mexican Grill (CMG, Financial) saw its shares fall by 3.93% after reporting mixed Q3 results. The company posted a 6% increase in comparable restaurant sales, slightly below expectations. Despite an increase in operating margins, higher ingredient costs impacted restaurant-level margins, leading to investor concerns.

First Solar (FSLR, Financial) reported Q3 earnings with GAAP EPS of $2.91, missing estimates, and revenue of $887.67 million. The company updated its 2024 guidance, lowering its net sales and operating income projections, which contributed to a 1.86% drop in shares.

Snap (SNAP, Financial) shares rose 4% after announcing Q3 results that exceeded expectations. The company reported a 15.1% year-over-year increase in revenue to $1.37 billion, with daily active users growing by 9%. The positive momentum in user engagement and content viewing contributed to the upbeat market response.

Enovix Corporation (ENVX, Financial) shares dropped over 15% after announcing a development agreement with a major smartphone OEM in China. The collaboration aims to develop a silicon anode battery for a 2025 smartphone launch, but the market reacted negatively to the news.

Magnite (MGNI) and Trade Desk (TTD) received new coverage from Wells Fargo, with Magnite rated "Equal Weight" and Trade Desk "Overweight." Analysts see potential growth for both companies, particularly in the context of regulatory changes and shifts in advertising spend.

GuruFocus Stock Analysis

• McDonald's Beats Estimates, Reverses U.S. Same-Store Sales Declines Amid E. Coli Concerns by Faizan Farooque
• Luckin Coffee Reportedly Plans US Expansion After Nasdaq Delisting, Fraud Scandal by Faizan Farooque
• PayPal Shares Drop Following Q3 Revenue Miss, Soft Q4 Guidance by Faizan Farooque
• SoFi Technologies Beats Q3 Estimates, Raises Full-Year Revenue Guidance by Faizan Farooque
• AppLovin Gains After Wells Fargo Initiates Coverage With Overweight Rating and $200 Price Target by Faizan Farooque