Stocks were mostly positive on Monday, but the Dow was weighed down by Nvidia (NVDA) and Nike (NKE). Still, the S&P 500 and the Nasdaq were boosted by Netflix (NFLX) and Tesla (TSLA) as well as an upbeat reading for a widely watched homebuilder survey. Looking ahead, Nvidia's earnings report is the highlight of the week, though investors continue the uneven process of pricing in a second Trump administration.
The NAHB/Wells Fargo National Housing Market Index (HMI) printed at 46.0 for November, up from 43.0 in October and better than the 44.5 consensus forecast compiled by FactSet. Still, the HMI remains in contraction territory. But, as Raymond James Chief Economist Eugenio J. Alemán notes, it's up seven points compared to 39.0 in August.
All three HMI indexes were up in November, according to the National Association of Homebuilders, highlighted by a seven-point increase to 64 in the survey result for sales expectations in the next six months. Current sales conditions rose two points to 49, while traffic of prospective buyers posted a three-point gain to 32.
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"Although the improvement in the Housing Market Index is good news for the new home sales market," Alemán writes, "it is clear that builders have continued to use incentives, including lower prices, to incentivize sales." The economist also observes that homebuilders still face labor and buildable lot shortages.
"On the positive side, they were upbeat that a Republican sweep would help the industry by reducing regulatory burdens for the industry," Alemán continues. "However, this seems like wishful thinking as housing market regulatory issues are dependent on state and local governments rather than at the Federal government level."
The Census Bureau will provide additional insights into the home construction market when it releases housing starts and building permits data for October tomorrow morning at 8:30 am Eastern. According to FactSet, the median forecast for housing starts is a seasonally adjusted annual rate of 1.34 million, down from 1.35 million in September. The median forecast for building permits is 1.44 million, up from 1.43 million in September.
The Nasdaq Composite added 0.6% to close at 18,791. The S&P 500 was up 0.4% to 5,893. The Dow Jones Industrial Average, above and below the breakeven line multiple times throughout the session, closed lower by 0.1% to 43,389.
Netflix scores with Friday Night Fights
Netflix gapped higher at Monday's opening bell and closed up 2.8% following its Friday Night Fights live event featuring a Mike Tyson vs Jake Paul match. Despite glitches impacting the experience for millions of subscribers that threatened to turn Tyson vs Paul into a technical knockout before the boxers even touched gloves, Netflix can claim a successful proof of case.
"If you stayed up past midnight ET to watch Paul vs Tyson, you know a lot more people than expected tuned in, as NFLX had bandwidth issues," writes Oppenheimer analyst Jason Helfstein (Overweight, the equivalent of Buy). As Helfstein notes, over the weekend Netflix reported 60 million households watched its Friday Night Fights event, and viewership peaked at 65 million concurrent streams.
These numbers highlight "NFLX's ability to generate viewership, suggesting the company will be successful with advertising around live events," Helfstein says. The analyst's math – "assuming 2.5 viewers per household implies 150 million viewers" and that number "compares to 124 million for the 2024 Super Bowl" – suggests NFLX achieved "the highest viewership for any U.S. broadcast" this year.
Netflix management recently reported that its ad-tier subscription plan reached 70 million monthly average users and has grown by more than 75% since May, "approaching critical scale for advertisers," according to Helfstein. The streaming giant's next live event is a Christmas Day NFL doubleheader featuring the Kansas City Chiefs vs the Pittsburgh Steelers and the Baltimore Ravens vs the Houston Texans.
"While the press will focus on the technical bandwidth issues and customer complaints, our guess is that viewing was likely ~2x internal expectations, a high-quality problem that can be easily fixed by Christmas Day," Helfstein said.
Netflix is upbeat about its future too. "We're pleased that we've reaccelerated our growth and, as we head into 2025, we expect to deliver solid revenue and profit growth by both improving our core series and film offering while investing in new growth initiatives like ads and gaming," management said in its third-quarter earnings announcement. Analysts are still adjusting their price targets, but Wall Street is generally bullish on NFLX.
Tesla surges on EV credit repeal plan
Tesla stock took off Monday, rising 5.6% on the incoming Trump administration's plan to repeal Biden-era tax credits for electric vehicles (EV) and establish a federal framework for fully self-driving vehicles. Tesla stock remains volatile following Trump's victory.
According to Dan Ives of Wedbush Securities, "This would be a huge step forward in easing U.S. rules for self-driving cars and be a significant tailwind for Tesla's autonomous and AI vision heading into 2025." Ives and Wedbush "estimate the AI and autonomous opportunity is worth $1 trillion alone for Tesla." They maintain their Outperform (Buy) rating and $400 price target for TSLA stock.
"EV tax credits getting pulled [are] a negative for the industry … [but] bullish for Tesla," Ives writes.
"Tesla has the scale and scope that is unmatched in the EV industry and this dynamic will give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment starting in 2025, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players (BYD, Nio, etc.) from flooding the US market over the coming years," Ives adds.
Nvidia reports earnings this Wednesday
Nvidia, which is scheduled to report fiscal third-quarter earnings after the closing bell on Wednesday, was down 1.3% Monday on a report by The Information that its new Blackwell chips are overheating when installed in high-capacity server racks.
The chipmaker's earnings announcements have become major Wall Street events. Indeed, ahead of the next Nvidia Day, as The Wall Street Journal reports, "Nvidia's stock has moved more than 9% on average following its last eight reports."
According to FactSet, analysts expect Nvidia to report sales of approximately $33 billion and earnings of $17.4 billion, up from $18.1 billion and $9.2 billion, respectively, a year ago.
We continue to track news about the company ahead of its fiscal third-quarter earnings event on our Nvidia earnings blog.
Stocks on the move
Nike led the Dow lower with a loss of 2.4%, as the athletic footwear and apparel retailer continues to face challenging trends.
"NKE's foot traffic levels declined 14% year over year (YoY) in October (vs -16% in September and -3% in August)," writes Jefferies analyst Randal Konik in a November 15 note. Web traffic levels declined 25% YoY in October following a 25% and 15% declines in September and August, Konik notes. The analyst remains "cautious on the company's go-forward performance."
The blue chip stock has dragged on the Dow Jones Industrial Average with a loss of more than 25% so far in 2024.
Palantir Technologies (PLTR) was down 6.9% Monday and was the worst-performing stock in the S&P 500. This comes after PLTR rose more than 11% Friday on management's announcement that it intends to change the public listing of the tech stock from the Nasdaq to the New York Stock Exchange.
On November 4, Palantir reported another beat-and-raise quarter, with U.S. revenue rising 44% year over year and 14% quarter over quarter (QoQ). Total revenue was up 30% YoY and 7% QoQ.
Super Micro Computer (SMCI) surged nearly 16% on a report from Barron's that it intends to submit a plan to the Listing Qualifications Department of the Nasdaq Stock Market on Monday that will allow it to regain compliance and continue to trade on the exchange.
On November 12, SMCI told the Securities and Exchange Commission (SEC) that it was unable to file its financial results for its most recent quarter "without unreasonable effort or expense." That was after Super Micro had notified the SEC that it was unable to file its annual report for the year ended June 30.
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