Published: October 28th, 2020
The Dow slumped on Friday, October 23, following Intel's poor performance after the company posted uninspiring data center revenue. With the uncertainties over a stimulus deal haunting the markets and keeping investors on edge, both the Dow and the S&P 500 experienced their first weekly loss in a month.
The Dow Jones Industrial Average closed the trading session on Friday, October 23, lower by more than 27 points than the previous day's results. The drop in the stock market index that gauges 30 large companies' performance on the U.S.'s stock exchanges was influenced by Intel's shares, which dropped by more than 10%.
Overall, the Dow shed almost a percent for the week ending Saturday, October 24, abruptly ending a three-week winning streak. The Nasdaq and the S&P 500 closed the week about 0.5% higher than the Dow, also posted losses. By the final hours of the day's trading on Friday, October 23, all the major indexes were steadily pacing towards the week's losses.
Aside from Intel, shares of many other companies moved turbulently and influenced the indexes' gauge this past week. For instance, Boston Beer Company (Samuel Adams Boston Brewery), the famed Samuel Adams Lager manufacturer, saw its shares jump almost 20% after the management raised guidance.
The Boston brewer reported its Q3 earnings per share that were higher than the Wall Street predictions even though the overall revenues were slightly lighter than projections.
The shares of Snap Inc., an American camera and social media company, also soared after the surprise earnings surpassed forecast. The shares were up more than 20% for the week, ending the record week on a high.
The positive performance came even as the company's net losses stood at $200 million. However, these numbers are 12% better than the $227 million loss the company managed last year.
Intel dropped thanks to the underperformance of one of its divisions. The tech giant's shares closed the week 12% lower after the server segment showed unexpected shrinks according to the Q3 earnings. The data center segment had posted strong growth in Q1 and Q2 of 2020 only to see a substantial decline in Q3 due to capacity digestions.
Virgin Galactic, a British space tourism company founded by Richard Branson, also had its shares plummet by more than 5%. Market experts think the abysmal performance is because of Goldman Sachs' influence. The American multinational investment bank commenced its coverage of the Virgin Group's subsidiary on Friday, October 23, with a not-so-inspiring neutral rating.
The shares of cloud computing companies Snowflake and Fastly also dropped by 5% each. Snowflake's mediocre showing was attributed to the broad selling-off of tech shares, while Fastly was affected by the Piper Sandler. The investment bank downgraded its rating of the cloud computing company from neutral to underweight.
Bloomin' Brands, an American casual dining restaurant chain, also saw its shares dip by more than 10% even after beating the Wall Street projections on earnings. The company declared a loss of 12 cents a share for $771.3 million in revenue. A poll by Refinitiv sampling market analysts had predicted a loss of 33 cents a share and $750.6 million revenue.
Shares of many companies recorded surprisingly impressive gains despite the Dow's dip. Shake Shack, the New York city-based fast casual restaurant chain, recorded a more than 3% increase in its shares. Meanwhile, Mattel's shares rose by 12% after the toy maker's reported quarterly earnings stretched far above analysts' forecast.
The company's earnings surged to 95 cents per share on $1.63 billion revenue, which outperformed Refinitiv's expectations of 39 cents per share on a $1.46 billion revenue volume. Mattel's impressive performance is attributed to the company's better-than-expected sales, especially from its dolls segment.
The shares of Cleveland-Cliffs Inc. (formerly Cliffs Natural Resources), an iron ore producer, also shot up by more than 6%. The Ohio-based miner reported its quarterly earnings on Thursday, October 22, which were better than expectations.
The company's CEO, Lourenco Goncalves, said that as the company continues to fulfill its orders from automotive customers at a notably fair pace, with their facilities back to normal operating status and current prices, they expect to increase the adjusted net earnings of Q4 of 2020.
The shares of Gilead Sciences, the American biopharma company, jumped 5% after the Food and Drugs Administration (FDA) approved its COVID-19 therapeutic drug, remdesivir.
The drug that was initially approved for emergency use can now be used to treat hospitalized COVID-19 patients. Remdesivir, an intravenous drug, effectively shortens the recovery time of hospitalized patients, according to research data that the company submitted to the FDA.
Bitcoin also recorded a positive week, rising almost 15%, its best week since July. Overall, the cryptocurrency markets rose by more than 18%.
Investors had trained their eyes on the last presidential debate hoping that it could flip the narrative. However, with almost 70 million ballots already cast as of Tuesday, October 27, the impact of the last debate was quickly muted. Instead, the markets are now watching the campaign's remaining days for any sign that might influence sentiment.
Raymond James, an analyst, attached to Ed Mills, said he had initially hoped for a narrative from the debate that would turn out to be a momentum for President Trump. The market perspective's biggest question now is if the race can tighten with the few remaining days to a point where a contested election is imaginable, Ed added.
The Dow Jones Industrial Average shed about 1% on Friday, October 23, on the day that Intel's shares bled more than 10%. Overall, the markets were a bag of mixed signals. Some shares rose while others recorded substantial drops. Seemingly, Q3 performance data was critical in determining market sentiment. Experts are now keeping an eye on the campaign trail for any event that may tighten the race.