Picks of the Day December 27, 2017.
Apple Overshadows Retailers’ Gains
The ingredients seemed in place for a Santa Claus rally, but Apple muscled out retailers, sending the 3 main indexes down on the day. What was all the hubbub about?! Reports on sales of the iPhone X. With Apple, it’s very hard to dissect and decipher exactly how many of its new iPhone version are being sold, and that’s why analyst’s constantly focus on the companies’ suppliers to gauge where sales are holding. Some contend, though, that that can be confusing – because it’s hard to know or isolate exactly which component parts are geared towards which iPhone version. But with Apple carrying so much weight – and some analysts predicting that its valuation could hit $1 trillion this coming year – the sky seems to be the limit and the stakes are so far reaching that any rumor or speculation, regardless of whether it’s truthful or not, has the ability to move AAPL, and thus the entire market! Apple’s gains, though, this year, have been extraordinary, simply jaw-dropping. AAPL was up 51% through Friday, the S&P 500 “only” 20%, which just comes to show how big of a driving force AAPL is behind the American economy. And if Apple does manage to repatriate its 100’s of billions of dollars in overseas income, investors might yet see another windfall! Apple is definitely a stock worth watching; with analysts so torn at times, it could be best just to follow the movement, to feel the pulse of the stock!
Apple’s suppliers, as noted, are the focus of the discussion – and yesterday, they took a big hit. Micron Technology (MU) fell 4%. Cirrus Logic and AVGO each fell 2.2%. LITE tumbled 4.3% and FNSR was off 2.3%.
And now, on to retailers! MasterCard’s Sarah Quinlan, senior vice president of market insights, couldn’t have said it better: “This year was a big win for retail.” MasterCard tracks not only online sales but retail sales, following each and every sector and industry. Was it the strong economy that did the trick?! Not just, said Quinlan. “The strong US economy was a contributing factor, but we also have to recognize that retailers who tried new strategies to engage holiday shoppers were the beneficiaries of this sales increase.”
Chief market economist at First Standard Financial, Peter Cardillo, also weighed in on the phenomenon: “What we are seeing here is no real shift in sentiment, but a shift in leadership, and I think that is positive going into the New Year.” There’s no denying that major indexes have made impressive gains but we’re seeing now is a rotation, tech stocks out, retail and energy stocks in. That couldn’t have been clearer on Tuesday!
Retail sales were up 4.9% year-over-year for the holiday season, making it the fastest growth pace since 2011. The combination of an onslaught of early-season promotions and an 18.1% leap in online sales made all the difference. Who, then, according to MasterCard’s SpendingPulse report were the biggest winners? Electronics and appliances saw their biggest sales jump in 10 years – driven by growth in smart home products the likes of Amazon Echo and Google Home.
J.C. Penney (JCP) soared 4.4%, Macy’s (M) rallied 4.6%, Kohl’s jumping 6.0%. Walmart (WMT) continued its spectacular year with gains of 1.0%, Rite Aid (RAD) bouncing back from losses earlier in the trading day to record gains of 0.5%. Target (TGT) edged up 0.7%, ANF and FINL both climbing over 4%.
On the economic front, Consumer Confidence fell more than expected in its December mid-month reading to 95.9 points, after having risen to 98.5 points in November. Reuters, based on its polling of economists, had expected a December reading of 97.1 points. The survey’s chief economist, Richard Curtin, noted: “Consumer confidence continued to slowly sink in December, with most of the decline among lower income households.” Oil futures soared on reports of Middle East supply disruptions. U.S. new home sales soared to more than a 10-year high in November, robust demand countrywide giving the figure a big boost. The rebound came on the heels of two disastrous hurricanes earlier in the year, Harvey and Irma.
Today’s Economic Calendar: Mortgage applications come out at 7:00, Consumer Confidence, at 10:00. Pending home sales will be released at 10:00.
Wednesday’s Hot Stocks: ILMN, WATT, TEUM, AAPL
Have a great trading day!
|Wednesday||9:00||S&P Corelogic Case-Shiller HPI||0.6 %||Medium|
|Wednesday||10:00||Pending Home Sales Index||0.6 %||Medium|
|Thursday||8:30||Jobless Claims||240 K||Medium|
|Thursday||11:00||Oil Inventories||0.4 %||Low|
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