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Megacap growth stocks are fading as a strong economy lifts the rest of the market.
The S&P 500 rose 1.7 percent between Friday, November 15, and Friday November 22. Every major sector climbed, along with 86 percent of the index’s members.
An unusual mix of stocks led the advance. Materials and energy, which stand to benefit from a strong economy, outperformed. The same was true of utilities and real-estate, which often do better in a weak economy. There was also more strength in software companies like Salesforce.com (CRM) as technology money keeps shifting away from semiconductors.
Speaking of semiconductors, traders shrugged after Nvidia (NVDA) reported decent quarterly results. Other trillion-dollar companies like Alphabet (GOOGL) and Amazon.com (AMZN) fell, a further sign of capital migrating to other parts of the market.
To illustrate, Tesla (TSLA) and Apple (AAPL) were the only two “Magnificent 7” companies that outperformed the S&P 500 last week. In contrast, more than 60 percent of the index’s members outperformed the broader benchmark.
| Biggest Gainers in the S&P 500 Last Week |
|
| Super Micro Computer (SMCI) | +78% |
| Keysight Technologies (KEYS) | +14% |
| Vistra (VST) | +14% |
| Costar (CSGP) | +12% |
| Deere (DE) | +12% |
“Economic growth is accelerating in the fourth quarter, while at the same time inflationary pressures are cooling,” S&P Global economist Chris Williamson said on Friday. “The prospect of lower interest rates and a more probusiness approach from the incoming administration has fueled greater optimism.”
Super Micro Computer (SMCI) continued its wild ride. Worries about its accounting erased two-thirds of its value between late October and mid-November. But the maker of AI servers hired a new auditor and submitted a plan to avoid delisting from the Nasdaq. Its 78 percent bounce made it the biggest gainer in the S&P 500 last week.
Keysight Technologies (KEYS) and Deere (DE) jumped after earnings and revenue beat estimates.
Vistra (VST) also surged and remains the S&P 500’s top gainer this year, according to TradeStation data.
Gold futures (@GC) rallied 5.5 percent after dropping for three weeks. It was the yellow metal’s biggest weekly gain since the pandemic. Energy stocks, industrial metals and small caps outperformed as well.
The main laggards were international stocks, airlines and solar energy.
Target (TGT) was the worst performer in the S&P 500 after results missed estimates. Inventories rose at 3 times the speed of revenue, a sign the retailer is struggling to move merchandise. It contrasted with strong reports from rivals like Walmart (WMT), Gap (GAP) and Ross Stores (ROST).
S&P 500, daily chart, with select patterns and indicators.
Last week saw the S&P 500 rise in each session. Prices inched below their October peak but managed to stay above it, which suggests that old resistance has become new support. The bounce also occurred at a 50 percent retracement of the election rally.
Next, the index remained above its 21-day exponential moving average. Those patterns are potentially consistent with an uptrend.
The advance/decline line additionally made a new high for the first time in over a month. That suggests breadth remains positive.
| Biggest Decliners in the S&P 500 Last Week |
|
| Target (TGT) | -18% |
| Ulta Beauty (ULTA) | -7.4% |
| Intuit (INTU) | -6.9% |
| AES (AES) | -6.7% |
| Incyte (INCY) | -5.5% |
This week is cut short by Thanksgiving on Thursday.
Bath & Body Works (BBWI) and Zoom Video (ZM) report earnings today.
Tomorrow brings results from CrowdStrike (CRWD), Best Buy (BBY), Dell Technologies (DELL) and HP (HPQ). New home sales are due in the morning and minutes from the last Federal Reserve meeting are in the afternoon.
Wednesday brings several economic reports:
Markets are closed on Thursday and close early (1 p.m. ET) on Friday.
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