Over the past week, the major US stock indexes gained ground led by the NASDAQ Composite, which appreciated by 1.31%. The S&P 500 and the Dow Jones Industrial Average advanced by 1.05% and 0.81%, respectively.
Three major catalysts were behind US stock market performance last week. Trade with China remained in the spotlight amid reports that a phase one deal was reached in principle and the US agreed to cut existing tariffs by up to 50% on $360 billion worth of Chinese imports and to cancel a new round of tariffs that was set to take effect on December 15. The announcement was preceded by signals that the deal could be delayed and that the previously announced date of December 15 was not the final date to reach a deal.
In addition, the FOMC decided to hold rates unchanged at Wednesday’s policy meeting. The Fed also suggested that it won’t raise rates in 2020. Fed Chair Jerome Powell reiterated the need for a steady rise in inflation to warrant a further rate hike. The central bank expects 1.9% inflation next year and 2.0% in 2021. Across the pond, the European Central Bank also kept its deposit rate at a record-low negative 0.5% and bond purchases at 20 billion euros ($22.30 billion) per month. In her first press conference since she took over as the president of the ECB, Christine Lagarde suggested that the central bank would continue with its accommodative policy to stimulate inflation.
Brexit was also highly discussed last week, as the general elections in the UK showed Prime Minister Boris Johnson’s conservative party win a clear majority of seats in the parliament. The outcome of the election means that the separation of the UK from the EU is back on track and is now likely to happen by the end of January 2020.
In the meantime, Apple Inc. (NASDAQ: AAPL) and Amazon.com, Inc. (NASDAQ: AMZN) continued to capture the attention of Financial Advisors, ranking as two of the most searched tickers, according to data from TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors. Apple continues to enjoy strong holiday demand for the iPhone, although now it’s top line might be impacted by the new Mac Pro, which went on sale last week at a starting price of $5,999. Amazon.com, Inc. (NASDAQ: AMZN) continues to be in the spotlight amid the ongoing holiday season. Last week, Jefferies maintained its ‘Buy’ rating and $2,180 target on Amazon, saying that the company’s one-day delivery option provides it a significant advantage over competitors.
Two other stocks that ranked on the fourth and fifth place on TrackStar’s list were General Electric Company (NYSE: GE) and Tesla Inc (NASDAQ: TSLA). General Electric Company (NYSE: GE) saw its stock upgraded by UBS to ‘Buy’ from ‘Neutral’ and the price target was hiked to $14 from $11.50. In the note, the analyst said that the company is on track to achieve strong earnings growth in the next two years and will manage to boost its free cash flow, which should change the stock’s narrative to “successful transformation”. Tesla Inc (NASDAQ: TSLA) made headlines in Germany last week, with Bild newspaper reporting that the company’s new factory near Berlin is expected to produce 500,000 vehicles per year, while Frankfurter Allgemeine Zeitung said Tesla plans to invest up to 4.0 billion euros ($4.50 billion) in the factory.
One company that was new in the list of the most searched tickers last week was Lululemon Athletica Inc (NASDAQ: LULU). It ranked on the third spot as its shares slumped by 3.70% between December 9 and December 13. The stock took a dive on Wednesday after the apparel maker released its financial results for the third quarter. Its GAAP EPS of $0.96 was better than the expected $0.93 and revenue of $916.14 million grew by 22.5% on the year and beat estimates by $18.60 million. In addition, the company’s comparable sales surged by 16% on the year, versus expectations of 5.2% growth. The company’s gross margin amounted to 55.1%, also better than the consensus estimate of 54.6%.
However, investors focused on the company’s guidance, which expects disappointing performance following the release of the third-quarter report. For the full year, Lululemon anticipates sales between $3.895 billion and $3.910 billion, versus estimates of $3.89 billion and EPS in the range of $4.75 to $4.80 compared to estimates of $4.75. For the fourth quarter, revenue is expected between $1.315 billion and $1.330 billion and EPS between $2.10 and $2.13, which is slightly lower than expectations of $1.34 billion and $2.15, respectively.