Market Overview

The stock market experienced a mixed performance today, with no strong movement in either direction. This lack of conviction is partly due to the major indices being near all-time highs. The S&P 500 closed with minimal change from yesterday, remaining about 16 points below its record closing high. Meanwhile, the equal-weighted S&P 500 saw a slight increase, but overall market breadth was negative. On the NYSE, decliners outpaced advancers by a 3-to-2 margin, and on the Nasdaq, the margin was 2-to-1.

Inflation and Interest Rates

Investors were evaluating the October Consumer Price Index (CPI) released this morning, which had a mixed impact on Treasuries. The total CPI increased 2.6% year-over-year, up from 2.4% in September. Core CPI remained unchanged at 3.3% year-over-year, raising concerns about inflation staying above the Federal Reserve's 2.0% target.

The 10-year Treasury yield, which reacts to inflation expectations, rose by two basis points to 4.45%. In contrast, the 2-year yield, which is sensitive to changes in the federal funds rate, decreased by four basis points to 4.28%. Following the CPI data, expectations for a rate cut increased slightly. The fed funds futures market now predicts an 82.3% chance of a 25 basis points rate cut at the December FOMC meeting, up from 58.7% yesterday, according to the CME FedWatch tool.

Sector Performance

Semiconductor stocks were a weak spot today, causing the PHLX Semiconductor Index (SOX) to decline by 2.0%. This downturn also affected the S&P 500 information technology sector, which fell by 0.3%, despite positive performances from Microsoft (MSFT) and Apple (AAPL), which gained 0.5% and 0.4%, respectively.

Index Performances

• Nasdaq Composite: +28.1%
• S&P 500: +25.5%
• S&P Midcap 400: +17.7%
• Russell 2000: +16.9%
• Dow Jones Industrial Average: +16.6%

Economic Data Review

Today's economic data included the following:

• Weekly MBA Mortgage Applications Index increased by 0.5%; prior was -10.8%
• October CPI remained at 0.2% (consensus 0.2%); prior was 0.2%
• October Core CPI remained at 0.3% (consensus 0.3%); prior was 0.3%

The key takeaway is that the shelter index accounted for over 65% of the 12-month increase in core CPI, suggesting that the headline inflation print is not as broadly inflationary as it appears. The unadjusted change in the all-items-less-shelter index was just 1.3% year-over-year.

Treasury Budget

The Treasury Budget for October showed a deficit of $257.4 billion, compared to a deficit of $66.6 billion in the same period a year ago. The deficit resulted from outlays of $584.2 billion exceeding receipts of $326.8 billion. As the Treasury Budget data is not seasonally adjusted, the October deficit cannot be directly compared to the September surplus. The key point is that the net interest outlay is nearing $1 trillion on an annualized basis.

Upcoming Economic Data

Thursday's economic data will include:

• 8:30 ET: October PPI (consensus 0.2%; prior 0.0%) and Core PPI (consensus 0.3%; prior 0.2%)
• Weekly Initial Claims (consensus 220,000; prior 221,000)
• Continuing Claims (prior 1.892 million)
• 10:30 ET: Weekly natural gas inventories (prior +69 bcf)
• 11:00 ET: Weekly crude oil inventories (prior +2.15 million)

Global Markets

Overseas market performances were as follows:

Guru Stock Picks

Barrow, Hanley, Mewhinney & Strauss has made the following transactions:

• Reduce in RIG by 99.93%
• Sold out in BFH
• Add in NTRS by 11.75%
• New position in APLE

Renaissance Technologies has made the following transactions:

• Reduce in GSL by 16.19%
• Add in BIRK by 307.76%
• New position in FXN

Dodge & Cox has made the following transactions:

• Reduce in JNPR by 60.51%

Tom Russo has made the following transactions:

• Reduce in LAMR by 0.02%
• Sold out in DD
• Add in GOOGL by 0.39%
• New position in TT

Kahn Brothers has made the following transactions:

• Reduce in PTEN by 3.22%
• Sold out in CVX
• Add in CWEGF by 3.43%
• New position in IBM

David Nierenberg has made the following transactions:

• Reduce in CYH by 11.39%
• Sold out in FHN
• Add in PLAB by 3.44%
• New position in EXE

Murray Stahl has made the following transactions:

• Reduce in AWK by 0.91%
• Sold out in LSXMK
• Add in MDLZ by 7.26%
• New position in M

Ken Fisher has made the following transactions:

• Reduce in FN by 3.43%
• Sold out in HSY
• Add in SONY by 12.68%
• New position in FUN

Tweedy Browne has made the following transactions:

• Reduce in ALV by 0.14%
• Sold out in NWLI
• New position in GL

PRIMECAP Management has made the following transactions:

• Reduce in RYTM by 1.31%
• Add in WOLF by 5.03%

Mohnish Pabrai has made the following transactions:

• Reduce in ARCH by 92.1%
• Add in CEIX by 347.95%
• New position in DAC

Jeremy Grantham has made the following transactions:

• Reduce in C by 5.85%
• Sold out in WLK
• Add in AMZN by 1.48%
• New position in DOX

Chris Davis has made the following transactions:

• Add in VTRS by 8.88%

First Eagle Investment has made the following transactions:

• Reduce in CHRW by 0.09%
• Add in XRAY by 8.28%

Michael Dell has made the following transactions:

• Reduce in TSQ by 0.8%

Today's News

Grayscale Bitcoin Trust (GBTC, Financial) continued its impressive upward trend, closing 0.09% higher at $71.30 on Wednesday. This marks the seventh consecutive session of gains, with the stock up 29.11% over the last six trading sessions and more than 108% year-to-date. The surge in cryptocurrencies follows Donald Trump's election victory, with Bitcoin nearing the $100,000 mark, although it has slightly retraced to $92,500.

Walt Disney Co. (DIS, Financial) saw a 1.8% rise in its stock on Wednesday, continuing a seven-day streak of gains. Activist investor Nelson Peltz (Trades, Portfolio) expressed interest in revisiting his investment if the stock falls back to the $80s, after previously selling his stake at $119. Disney is anticipated to appoint a new CEO by next year, fueling investor optimism.

Shopify (SHOP, Financial) shares climbed for the seventh consecutive day, closing 5.66% higher at $115.09. The stock has risen 83% over the past year, supported by strong Q3 2024 results, which showed 26% year-over-year revenue growth and expanding profit margins. Analysts remain optimistic about its market leadership in e-commerce and international expansion.

Cisco Systems (CSCO, Financial) shares dipped 0.9% despite reporting better-than-expected fiscal first-quarter results. The company posted adjusted earnings of $0.91 per share, beating analyst expectations of $0.87, although revenue fell 5.6% year-over-year to $13.84 billion. The mixed performance reflects challenges in product revenue, which dropped 9.2% from the previous year.

Vroom (VRM, Financial) filed for Chapter 11 bankruptcy protection in a Texas court as it aims to restructure over $300 million in debt. The restructuring plan involves converting $290 million of unsecured convertible senior notes into equity, allowing Vroom to continue operations without long-term debt.

Hims & Hers (HIMS, Financial) launched an online GLP-1 supply tracker to address shortages of popular weight-loss drugs like Novo Nordisk's (NVO, Financial) semaglutide. The tracker has attracted around 80,000 users reporting difficulties in accessing these medications. Hims & Hers markets a compounded version of semaglutide for weight loss.

Mastercard (MA, Financial) experienced a 1.4% drop in its stock after announcing a slowdown in expected annual revenue growth. The company revised its net revenue compounded annual growth rate to the high end of low double-digits for 2025 to 2027, down from previous high-teens percentage expectations. Despite this, Mastercard aims to maintain a strong operating margin of at least 55%.

Advanced Micro Devices (AMD, Financial) announced plans to reduce its global workforce by approximately 4% to focus on growth opportunities, particularly in challenging Nvidia's (NVDA) dominance in AI chips. The layoffs are part of a strategic realignment to better position the company for future growth.

Zoom Video Communications (ZM) ended a six-session streak of gains, closing 1.48% lower at $85.04. Despite the dip, the stock has gained over 20% this year. Morgan Stanley raised its price target to $86, maintaining an Equal-Weight rating. Analysts remain divided on the stock's prospects.

CNH Industrial (CNH, Financial) was highlighted by David Einhorn (Trades, Portfolio) at a conference, where he revealed a "medium" sized position in the company. Einhorn's investment reflects confidence in CNH's potential amidst challenging market conditions.

Super Micro Computer (SMCI, Financial) disclosed delays in filing its quarterly report due to ongoing investigations and the need to engage a new accounting firm. The company is working to resolve these issues and complete its filings promptly.

GuruFocus Stock Analysis

• Charter Communications to Acquire Liberty Broadband in All-Stock Deal by Faizan Farooque
• BioNTech to Acquire Biotheus for $800 Million to Expand Oncology Portfolio by Faizan Farooque
• Meta to Introduce Ads on Threads in Early 2025 by Faizan Farooque
• Pure Storage Invests in CoreWeave, Forms Partnership for AI Cloud Services; Stock Drops by Faizan Farooque
• Analysts Upgrade Apple Stock with Bullish Targets, Pushing Price Forecasts Higher by Nauman khan