Monday Morning Edge Report - November 6, 2023

Stocks Get Off To A Hot Start In November

Author

Mark Roussin
November 06, 2023

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Market Talk ⏪

Welcome to the Monday Morning Edge Report, where we breakdown the top stories going on in the stock market to help give you, the investor, and edge in the market.

Last week was was a jam packed week of earnings as we heard from a number of large companies that really showed a mixed bag. You saw big swings to the upside and big swings to the downside as volatility remained heightened. This week is expected to be much of the same, with another full week of earnings on deck including from the likes of Apple.

We are giving the newsletter a refresh in terms of layout and also rebranding it to “THE INVESTORS EDGE” as we look to keep ALL investors informed on the stock market and cover more than just dividend stocks.

5 Stories Moving The Market:

  1. Fed Interest Rate Decision ⏩ Rates stay put as expected

  2. October Jobs report ⏩ Bad news is good news for this market

  3. November starts hot for the market ⏩ Gearing up for that 4th quarter run

  4. Apple revenues fall for 4th straight quarter ⏩ Revenue problem at AAPL

  5. Q3 Earnings Better than expected ⏩ Many companies are reporting solid Q3 earnings

1. Fed Interest Rate Decision

On Wednesday of last week, the Federal Reserve voted to keep rates unchanged. Rates have increased 11 times in the past 18 months, bringing the Fed Funds rate up from 0% to a range of 5.25% to 5.50%, the highest level in more than two decades.

The Fed is largely expected to keep rates at an elevated level for some time as they continue to try and combat sticky inflation.

The next Fed meeting, last of the year, is next month. The CME Fed Watch tool projects rate cuts to begin in Q2 2024.

2. October Jobs Report

The October nonfarm payroll report showed that 150,000 jobs were added during the month, well short of consensus estimates of 170,000. Not only was the figure short, but it was also a drastic decrease from the September report that showed nearly 300K jobs added during the month.

As we have seen elsewhere, bad news has been good news for the stock market. Normally a weak jobs report is not good for the economy nor the stock market, but investors see it as a weakening in the labor market could keep the Fed from hiking rates again.

Unemployment also rose to 3.9%, the highest level since January 2022. October’s job adds were the lowest since June.

3. November starts hot for the market

As you saw from the figure at the start of the newsletter, the stock market had a huge week with the indexes rising as follows:

  1. Dow Jones Industrial: +5.1% on the week / +2.8% YTD

  2. S&P 500: +5.9% on the week / +13.5% YTD

  3. Nasdaq: +6.6% on the week / +29% YTD

November is historically a good month for the stock market and the month go off to a hot start as Treasury Yields fell on the week, relieving some pressure.

Not much in terms of economic data this week, but we do have a lot of Fed speeches this week, which investors will be watching closely regarding any further rate hikes or talk of rate cuts even.

The best thing about the stock market rally we saw last week was how broad it was. It was not just the magnificent 7 pulling the markets higher, it was across the board.

4. Apple Earnings Fall Short….Again

Apple reported their Q4 earnings last week that underwhelmed investors.

  • EPS: $1.46 per share vs. $1.39 per share expected 

  • Revenue: $89.5 billion vs. $89.28 billion expected 

  • iPhone revenue: $43.81 billion vs. $43.81 billion expected 

  • Services revenue: $22.31 billion vs $21.35 billion expected 

  • Gross margin: 45.2% vs. 44.5% expected 

Mac sales and iPad sales underperformed during the quarter, two areas CEO Tim Cook believes will have a strong holiday period coming up. This next quarter, through December’s holiday period is typically the best and most important quarter for Apple.

Revenues for the company have now decreased for 4 consecutive quarters. We are not talking about slowing revenue growth, instead we are talking about revenue declines.

Shares of AAPL fell 3%+ after reporting, but still climbed 5% on the strong week for stocks.

PREMIUM Subscribers will continue to receive Earnings Recaps this week as well as our Individual Stock Deep Dives for the month. Become a subscriber today for less than $1 per day!

5. Q3 Earnings have been Better Than Expected

We are the majority of the way through Q3 earnings season and the constant theme has been “better than expected” earnings from companies. Now, if you have been reading my newsletter for any amount of time then you probably know I hate that phrase.

Earning sover the past few weeks have been trending lower, which further lowers the bar for companies reporting earnings.

Investors have put weight into what company’s are reporting, but more importantly, investors are looking for color in terms of guidance. Some companies we have seen beat on earnings, yet their stock fell hard due to weaker than expected guidance. The uncertainty that lies ahead is what investors and executives are worried about moving into 2024.

We still have a full plate of earnings set to roll out this week.

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  • Monthly Portfolio Updates

  • 2 Individual Stock Deep Dives Per Month

  • Earnings Recaps

  • Valuation Dashboard

  • Subscriber only content

Subscribers will receive my Monthly Portfolio update for the month of October this week.

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Earnings on Deck 💰

Another FULL week of Earnings is on deck!

Here are the companies reporting earnings this week:

Analyst Upgrades/Downgrades 📝

In this section we will highlight any recent notable analyst upgrades or downgrades.

  • Barclays upgrades AbbVie to overweight from equal weight

  • Raymond James downgrades Cisco to market perform from outperform

  • Citi upgrades Stanley Black & Decker to buy from neutral

  • Raymond James upgrades L3 Harris to outperform from market perform

  • Bank of America upgrades Chevron to buy from neutral

  • Wells Fargo initiates Shopify as buy

  • Citi upgrades T. Rowe Price to neutral from sell

  • Baird upgrades L3Harris Technologies to outperform from neutral

  • D.A. Davidson adds Ulta to the top picks list

  • Northcoast upgrades Boeing to buy from neutral

  • Morgan Stanley upgrades Progressive to equal weight from underweight

  • Truist upgrades Amgen to buy from hold

  • Citi upgrades Clorox to buy from neutral

  • Bernstein upgrades Chevron to outperform from market perform

Poll of the Week 📊

Economic Data This Week 📆

Monday

  • Fed Gov Cook speaks

Tuesday

  • US Trade Deficit

  • Fed Vice Chair Barr speaks

  • Fed Gov Waller speaks

  • Consumer Credit

Wednesday

  • Fed Gov Cook speaks

  • Fed chair Powell delivers opening remarks

  • Wholesale inventories

  • Fed Vice Chair Barr speaks

  • Fed Vice Chair Jefferson speaks

Thursday

  • Initial Jobless Claims

  • Fed Chair Jerome Powell on panel at IMF

Friday

  • Veterans Day holiday

Other Resources 📺

If you have not done so yet, check out my growing YouTube community of ~39,000 like-minded investors where I publish weekly videos focused on building wealth through investing.

Here is the latest video I released: Realty Income is a DISASTER | Is The REIT a BUY, SELL, or HOLD?

Here is another video I put out last week while on vacation: Warren Buffett LOVES Investing in Dividend Stocks | Here Is How Much He Earns In Dividend Income:

Here are a few others of my latest videos:

If you enjoyed the newsletter, leave a LIKE and COMMENT down below. Also, if there is someone that could benefit from this newsletter, consider sharing it.

Have questions? You can email me directly at [email protected].

Happy Investing!

Mark

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