Markets popped higher at the opening after President Biden said he will renominate Jerome Powell as chairman of the Federal Reserve for a second term. At the close however the Dow was up only 17 points at 35,619. The NASDAQ was down 202 points at 15,854. Investors took gains when analyst at several firms expressed concern over the potential effects of interest rate hikes next year and how this will change forward valuation metrics. Last week the Dow fell about 1.3% but still trades within a stones throw of an all-time high.
The Economy and Earnings
Retailers Walmart and Target reported earnings last week and the numbers were good. Walmart beat both top and bottom line estimates with revenue up 4.3% while net income gained 8%. US e-commerce sales grew 8% in the quarter and are up 87% over the past two years. Target posted a 13% revenue rise while net profits grew 9%. Even though margins were under pressure, CEO Brian “Corny” Cornell said the company is anticipating a “really strong” holiday season and Target has been working hard to bypass supply chain bottlenecks to ensure adequate inventory for the Christmas shopping season.
With gasoline prices up around 40% over the past year, the price of crude oil has recently slipped below $80 per barrel for WTI crude and on Monday traded at $75.84 per barrel. The pullback in prices has been attributed to demand concerns following a covid lockdown in Austria and fears it could spread across Europe. In the US, meanwhile traders are weighing the potential release of oil from the strategic reserve as the White House tries to ease the burden that higher prices are placing on consumers.
Shares of Rivian took a one-two punch which sent shares down in heavy trading action. Punch one was when Ford said it has relinquished its board seat and shelved plans to develop an EV with Rivian. Punch two was a report stating that tests of Rivian’s delivery vans ordered by Amazon consumed 40% more battery power if the driver used the heater or AC thus cutting the range significantly from 120 to 150 miles down to 70 to 90. I guess the answer to this problem might be long underwear in the winter and shorts in the summer.
Items of Interest
Markets will be closed on Thursday for the Thanksgiving holiday and open for a shortened session on Friday. The Farm Bureau reported that average turkey prices are up 24% from this time last year. On Friday the Scouts will be setting up the Christmas tree lot for our annual sale.