Weak Q3 Retail Earnings Drag Down Markets
US stocks ended last week with losses as retailers posted disappointing third-quarter results and investors weighed mixed signals regarding US and China trade talks. The S&P 500 inched down by 0.38%, NASDAQ Composite lost 0.35%, and the Dow Jones Industrial Average declined by 0.57%.
On Tuesday, a number of retailers started to report their third quarter results. Out of the gate, Home Depot Inc (NYSE: HD) and Kohl’s Corporation (NYSE: KSS) plunged after both companies lowered their outlook, dragging other retailers and the S&P 500 behind. On the following day, Target Corporation (NYSE: TGT) helped the segment recover by posting better-than-expected results and increasing its full-year profit guidance.
Investors were also disappointed by reports that the US-China trade deal might take longer than expected, as both countries are still debating the conditions. Beijing is asking for more extensive tariff rollbacks and the White House is also increasing its demands. Nevertheless, talks are making headway, although the negotiations might be overshadowed by the US Congress passing a bill supporting Hong Kong protesters, although President Trump might veto the bill when it gets on his desk.
The FOMC October meeting minutes were also in the spotlight last week, with investors learning that most participants agree that the last rate cut might be sufficient to support moderate growth.
In other news, the US avoided a government shutdown on Friday, as President Trump signed a short-term spending bill into law before the midnight deadline. The government is now funded through December 20 and lawmakers have more time to pass a long-term appropriations deal.
Now that we’re all caught up on major market catalysts from last week, let’s take a look at some stocks that were in the spotlight of Financial Advisors last week and the main developments that put them there. The afore mentioned Home Depot, which posted disappointing results, landed the third spot on the list of most searched tickers among Financial Advisors that was compiled by TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors.
Home Depot was preceded by Apple Inc. (NASDAQ: AAPL) in the second place. Apple has been enjoying strong demand for its latest iPhone, a fact that was not overlooked by analysts. In addition, last week, President Trump suggested that Apple might be exempt from tariffs on Chinese imports and said that he asked CEO Tim Cook to help build 5G infrastructure in the US.
AT&T Inc. (NYSE: T) and Amazon.com, Inc. (NASDAQ: AMZN) were the fourth and fifth most searched tickers last week, respectively. AT&T Inc. (NYSE: T) was mentioned by two sell-side analysts last week. Moffett Nathanson slashed the rating to Sell on valuation concerns and expectations of weakening fundamentals. KeyBanc Capital Markets reiterated its Sector-Weight ratings, but said the company is facing challenges in subscriber segments and increasing competition in streaming. Amazon last week announced the expansion of its free ad-supported music streaming service to other platforms and money transfer company The Western Union Company (NYSE: WU) said it selected AWS as its long-term strategic cloud provider.
However, the stock that was on the first spot on Financial Advisors’ list last week was Advanced Micro Devices, Inc. (NYSE: AMD). On Monday and Tuesday, AMD’s stock surged by 3.50%, ending at the highest level in 13 years. Two catalysts contributed to this growth. On Monday, Cowen boosted its price target on the stock by $7 to $47. Analyst Matthew Ramsay raised the target following a meeting with AMD CEO Lisa Su and praised the company’s roadmap and the “long-term nature of investor conversations.”
On Tuesday, AMD announced its new graphics card, 7nm Radeon Pro W5700. The GPU is powered by AMD’s RDNA architecture and offers more productivity. It’s aimed at 3D designers, architects, and engineers.
However, over the following three days, the stock lost ground and ended the week 1.80% in the red. On Thursday, Northland Securities downgraded the stock to ‘Market Perform’ from ‘Outperform’. The firm suggests that AMD’s valuation has moved beyond its fundamentals and that even though its market share increased, growth is becoming more complicated due to Intel Corporation (NASDAQ: INTC)’s dominance.