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“’Deserves’ is an impossible thing to decide. No one deserves anything.” – Milton Friedman
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
With the Fed and the Ms of the mega-caps behind us, we’re just about halfway through what has been a monster week of economic, earnings, and Federal Reserve data. Through yesterday’s close, the S&P 500 was down 0.4% for the week, which wasn’t that bad. If you take into account the overnight gains that followed the monster earnings from Meta Platforms (META) and Microsoft (MSFT), though, we’re up about 0.5%, which is pretty good.
Futures are sharply higher this morning following positive earnings reports from the megacaps. Today and tomorrow will provide a lot more economic data to deal with, though. This morning, it’s Personal Income and Spending, PCE, and jobless claims, while tomorrow’s focus will be the Non-Farm Payrolls report. On the earnings front, it’s the As turn tonight with Amazon.com (AMZN) and Apple (AAPL) on the calendar, so we’ll see if they can keep the positive streak alive.
Despite the positive overnight action in equity futures, Chinese stocks were down sharply, with declines of over 1% while Japan was up 1%. The rally in Japan followed a BoJ rate decision where rates were left unchanged. In Europe, the tone is also mixed with the STOXX down fractionally.
Yesterday, we mentioned that a number of commentators were pointing to negative reactions in the stocks of PayPal (PYPL), Stanley Black & Decker (SWK), United Parcel Service (UPS), and Whirlpool (WHR) as a potential red flag for the economy. We thought those concerns were misplaced, given that these stocks have been disasters in terms of their performance over the last five years. On a combined basis, they also have a market cap of just $156 billion.
Last night, we got reports from Meta Platforms (META) and Microsoft (MSFT). META has a market cap of more than 10 times the four stocks mentioned yesterday, while MSFT’s market cap is more than 20 times larger. As shown in the chart below, both stocks have also been a much better representation of the economy over the last five years.
In the case of META, it’s hard to believe how far this stock has come since its bear market lows less than three years ago. Think about this for a second. At its low on 11/3/22, META closed at $88.91 per share, and earlier this morning, shares were up $86. In other words, META was up almost as much overnight as its entire share price was at the low in November 2022.
Given the massive rally in META, it’s not a big leap to conclude that it has been one of the top-performing stocks since its low in November 2022. As shown on the table below, taking early morning gains into account, the stock is up nearly 780% which is only enough to rank as the fourth-best performing stock during that time. Palantir (PLTR) tops the list with a gain of over 1,800% followed by Nvidia (NVDA) at 1,261%, and then Vistra (VST) with its gain of 805%. Even after rallying 777%, META is still underperforming a Utility stock!
On a final note, while META and MSFT are on pace for big gains today, watch how they trade intraday. Earlier this week, we saw Boeing (BA) rally on good news at the open only to sell off intraday. That’s not a pattern bulls want to see becoming a trend!
