This week the rally continued for the stock market with multiple indexes growing about 2% each reaching all time highs. The S&P 500 closed at $3,329.62, the NASDAQ at $9,388.94, and the Dow Jones Industrial at $29,348.10.
Earnings season was in full effect with the nation's biggest banks reporting earnings. Wells Fargo headline numbers were disappointing due to lower net interest income and increased expenses. Fourth quarter earnings per share came in at $.93 per share missing expectations by $.19, and coming in less than the previous quarter at $1.21 per share. J.P. Morgan Chase had a killer fourth quarter profit of 21% with an earnings of $2.57 per share, which is primarily due to trading performance and mortgage banking fees. Citi Group beat estimates with earnings per share of $1.90 which equates to 4.4% fourth quarter growth. This was primarily backed by revenue strength. Overall the banks performed well as revenues soared from the market's continued strength.
Phase one of the trade deal with China was signed. This effort by the two parties reduces most U.S tariffs on Chinese imports. On top of this China commits to buy more U.S. goods amounting to over $200 billion. Phase two negotiations are expected to begin soon, but it is unlikely that anything is worked out before the 2020 elections.
The housing market is seeing a continuous climb as home building activity rose to a thirteen year high. Data released on Friday shows that the December amount of new housing units amounted to over 1.6 million units (17% surge.)
Alphabet ($GOOGL), the parent company of Google, is the fourth company to reach a market cap of $1 trillion. With this extension of the trillion dollar mark, it joins the ranks with companies such as Apple, Amazon, and Microsoft.
Visa ($V) acquired Plaid (a network that makes it easy for people to securely connect their financial accounts to the apps they use to manage their financial lives) this week for a staggering $5.3 billion bid. This push by Visa flashes a signal that traditional financial services company are making a push to modernize their business strategies. The Plaid acquisition allows Visa a modern set of developer APIs to facilitate the movement of funds. This will allow Visa to create a more streamlined experience for its users. More people are using mobile payment apps like Venmo and Robinhood for personal trading. For example, Plaid enables users to link their bank account to Venmo. The Plaid partnership was an important move forward for Visa. The CEO Al Kelly noted how “slow out of the chute” VISA has been when it comes to financial technology. This acquisition changes that while also allowing consumers more security and control over their financial data.
Luckin Coffee Inc. ($LK) has been the stock to watch this week after multiple price target increases. This China-based coffee company is Starbuck’s rival. In comparison, Luckin Coffee ended 2019 with 4,500 stores whereas Starbucks had 4,300 locations. Over the past six months LK has seen over a 160% gain in the price of their shares. The US coffee market reached approximately $88 billion in 2018. The Chinese coffee market is expected to be over $100 billion by 2025 ($140 billion according to one statistic.) Though this IPO has not even been released for a year and has seen tremendous growth, many early-bird investors still think it has a lot of room to grow. Recently the company acquired $778 in secondary stock offerings which shows investors are on board. The thing to watch is the company’s extreme fast growth. Far too often companies that grow this quickly come crashing down. Overall, definitely a good stock to keep on your radar.
Beyond Meat ($BYND) is back in the news and has seen continued volatility, which is nothing new for this stock. The stock’s IPO price in May 2019 was $25/share. In a very short time, two months, the stock jumped to $234! As of Friday’s close it ended in the $109 range after several analyst downgrades. Trading in the $90 region the week prior, it hit a high of $135.23 on Tuesday. The recent spike it has seen is due to Impossible Burger saying they were not able to produce enough burgers to partner with McDonald’s. Beyond will test its products on a small scale with McDonald’s. The last quarter results for Beyond Meat do show a sign of positivity as they reported their first profitable quarter. The plant-based food industry is a booming market, and this company is trying to capitalize off of that. Keep $BYND on your radar.
Check back next week for Ultra Instinct’s Weekly Recap!