U.S. equities hemmed and hawed on Friday and ultimately, went nowhere. It was a quiet session in the stock market today, as equities took a breather. Record high after record high this week left bulls exhausted, but not without fight.
- The S&P 500 moved higher by 26 basis points.
- The Dow Jones Industial Average ended the day flat.
- The Nasdaq Composite inched higher by 48 basis points.
- The Russell 2000 Index finished up 22 basis points.
While investors may not have had the stamina to bid shares higher into the weekend, they were strong enough to hold up against potential trade war headwinds. While China and the U.S. both look to strike a deal on their phase one agreement, investors are on edge with each passing headline on the matter.
China wants the U.S. to start rolling back more tariffs in good faith; the U.S. wants to keep certain tariffs in place so it maintains some leverage. Can you blame either side?
Not really. But let’s hope that a phase one deal gets done, and that it leads to a phase two agreement. China and the U.S. coming together could be the catalyst that the global economy needs.
Monday, Nov. 11 will kick off the Singles Day holiday, a massive one-day annual shopping event in China that was coined by Alibaba (NYSE:BABA). The stock has been trading quite well leading up to the event, hitting its highest level since May — when trade-war tension crushed BABA lower.
In any regard, it’s not just Alibaba that benefits from the holiday, although it is certainly the biggest winner when it comes to sales and gross merchandise volume.
Much like when Target (NYSE:TGT), Best Buy (NYSE:BBY), Walmart (NYSE:WMT) and others benefit from Amazon’s (NASDAQ:AMZN) mid-summer Prime Day event, JD.com (NASDAQ:JD) and other Chinese retailers enjoy Alibaba’s Singles Day.
One cool feature from Adobe (NASDAQ:ADBE) is how much of a role it plays in e-commerce and analytics. From its outlook, the company believes, “Singles’ Day (Nov. 11) is expected to generate more revenue than the popular U.S. shopping holidays Thanksgiving, Black Friday, Cyber Monday and the weekend in between combined.”
One last thing worth mentioning?
Alibaba is still planning a secondary offering in Hong Kong, despite continued unrest in the nation. According to reports, the company plans to do the offering in the last week off November (Thanksgiving week here in the U.S.). Alibaba is looking to raise $10 billion to $15 billion in the sale and would represent the world’s “largest-ever cross-border secondary listing.”
Alibaba IPO’d in 2014 on the New York Stock Exchange.
Movers in the Stock Market Today
Shares of Activision Blizzard (NASDAQ:ATVI) had a relatively mellow closing price, about flat on Friday. Despite the headline finishing result, the stock had a much wider trading range on Friday after reporting its third-quarter results.
Earnings of 32 cents per share topped expectations by 9 cents, while net bookings of $1.21 billion beat estimates by $50 million despite falling 12.3% year-over-year. Surprisingly, shares are holding up despite underwhelming fourth-quarter guidance. Management expects Q4 earnings of $1.15 per share and net bookings of $2.65 billion vs. expectations off $1.27 per share and $2.7 billion, respectively.
In an interesting M&A twist, HP Inc. (NASDAQ:HPQ) actually tried to buy Xerox (NYSE:XRX) within the past few months. At the time, HP asked for more time to conduct due diligence. That apparently prompted XRX to make a $22 per share offer for HP earlier this week. It’s an interesting proposition, given that HP has a market cap about four times the size of XRX.
A combination going the other way — HP acquiring XRX would have seemingly made more sense — but the former’s interest in the latter may increase the odds that the deal goes through. Remember, Carl Icahn owns about 10% of Xerox at the moment.
What Else Happened in the Market
Boeing (NYSE:BA) just can’t catch a break when it comes to the 737. Everyone is familiar with the 737 MAX issues that have plagued the company. Now, the 737 NG is a potentially budding issue for BA. The plane’s pickle fork has led to some cracking in the jet, and while only a few dozen planes have been identified to have the issue, more planes with less flight time may be popping up with the issue. In other words, more 737 NG jets could have the same issue.
Chesapeake Energy (NYSE:CHK) remains below $1 per share. That’s even as CEO Doug Lawler and chairman Brad Martin scooped up a combined 125,000 shares amid the decline. Unfortunately, the news may be too little, too late.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.