November 5th Market Overview

Happy Monday everyone.

Today is the day - election day. Markets are showing strong momentum going into election results this evening. I expect serious volatility tomorrow.

Here is some fun VIX data for everyone before getting into the market news.

2004 Election: -6.18% change
2008 Election: -11.08% change
2012 Election: -2.67% change
2016 Election: 0.16% change
2020 Election: 18.54% change

Let's dig in...

Executive Summary

• Markets rally broadly with over 80% of S&P 500 stocks advancing
  

• Service sector activity hits highest level since July 2022
  

• Corporate earnings continue exceeding expectations, particularly in tech
  

• Election uncertainty balanced by strong economic fundamentals

Market Overview

The broad-based rally suggests to me that investors are optimistic despite election uncertainty, with Ryan Detrick, chief market strategist at Carson Group, noting “the economy is in pretty darn good shape.”

Key Market Drivers

1. Election Impact: Historical data since 1980 shows major averages typically gain between Election Day and year-end, though near-term volatility is expected
   

2. Service Sector Strength: ISM services index hit 56% in October, the highest since July 2022, significantly beating expectations of 53.7%
   

3. Corporate Performance: Notable earnings beats from technology and healthcare sectors driving positive sentiment
   

4. AI Momentum: Continued strong demand for AI solutions boosting tech sector performance

Stock Spotlight

• $PLTR: ▲ 14% after reporting Q3 revenue up 30% YoY to $725.5M, with U.S. commercial revenue surging 54%. Management cited “unrelenting AI demand”
  

• $HIMS: ▲ 7.2% following massive Q3 beats - revenue up 77% YoY to $401.6M, free cash flow up 312%, and subscriber base reaching 2 million
  

• $TSLA: ▲ 4% after Chinese insurance registration data showed 50% week-over-week increase to 15,700 units
  

• $CELH: ▼ 23% following quarterly dividend cut and disappointing earnings outlook

Big Name Updates

• $NVDA: Preparing to join Dow Jones Industrial Average, in talks to invest in Musk’s xAI
  

• $AAPL: Exploring smart glasses market with “Project Atlas,” studying alternatives to Meta’s Rayban offerings
  

• $BA: Strike ends with approval of new contract featuring 38% wage increase and $12K ratification bonus

Other Notable Company News

• $META: Opening Llama AI models to U.S. defense agencies, marking shift in military tech policy
  

• $NFLX: French authorities investigating potential tax fraud at Paris and Amsterdam offices
  

• $EBAY: Bernstein initiates outperform rating with $70 target, citing category focus driving GMV growth

Sector Watch

Bond Market

Treasury yields remain sensitive ahead of this weeks Fed meeting. Markets pricing in a 99% chance of a quarter-point cut is putting downward pressure on yields, as bonds typically rally on rate cut expectations. Not much going on today in the bond markets.

Policy Watch

UBS maintains 2025 S&P 500 target of 6,600, suggesting roughly 15% upside from current levels.

Senator Warren urges Federal Reserve to deliver 50bps cut, though market expectations remain more modest.

Election outcomes could significantly impact fiscal policy, with Republican victory potentially leading to deregulation while Democratic control might bring tax policy changes.

What to Watch

1. Federal Reserve November Meeting:

• Powell’s commentary on future policy moves

• Market reaction to potential guidance shifts

• Impact on treasury yields

2. Election Result Impact:

• Bank stocks for potential deregulation under GOP control

• Tax policy implications across sectors

• Trade-sensitive stocks given potential tariff changes

3. AI Sector Developments:

• $PLTR’s expanding partnerships with Microsoft

• $NVDA’s strategic investment moves

• Enterprise adoption trends

4. GLP-1 Drug Market(Ozempic baby):

• $HIMS reporting continued supply shortages

• 80,000 users unable to access name-brand medications

• Impact on alternative treatment providers

 
Thanks for reading 🙂

- John