Braces Are Back?

Tale of the Tape

Good evening, everyone. Welcome back to another day on Wall St.

Stocks put in quite the reversal. The S&P 500 was trading below Monday’s low before flipping the switch and finishing green on the day.

The Russell 2K kicked butt. See more on the small-caps strength below.

Energy SURGED. $XLE ripped 4% but we’re still waiting to fill September’s gap. (9.21.2020)

Real Estate was the weakest sector. It is 2020.

The social stocks zipped and flipped. $SOCL closed at an all-time high.

Solar sucked early but it closed flat. Maybe the sun will come out tomorrow.

Align Technology, maker of Invisalign soared 35%. Earnings were strong.

Here are the closing prints:

S&P 500	3,453	+0.52%
Nasdaq	11,506	+0.19%
Russell 2000	1,630	+1.65%
Dow Jones	28,363	+0.54%

Earnings Round-Up

Align Technology investors were smiling today after the Invisalign maker reported blowout Q3 earnings after Wednesday’s close.

Here are the numbers:

EPS: $2.25 vs $0.60 est.
Revenue: $734M vs $502M est.

And here’s the weekly chart:

$ALGN closed up 35%.

AT&T reported earnings before today’s open. EPS met estimates while revenue exceeded. Wireless subscriber additions were highlighted with updated guidance.

Here are the results:

EPS: $0.76 vs $0.76 est.

Revenue: $42.3B vs $41.61B est.

$T CEO John Stankey had this to say:

We delivered a solid quarter with good subscriber momentum in our market focus areas of connectivity and software-based entertainment. Wireless postpaid growth was the strongest that it’s been in years with one million net additions, including 645,000 phones. We added more than 350,000 fiber broadband customers and are on track to grow our fiber base by more than 25% this year. And we continue to grow and scale HBO Max, with total domestic HBO and HBO Max subscribers topping 38 million — well ahead of our expectations for the full year. Our strong cash flow in the quarter positions us to continue investing in our growth areas and pay down debt. We now expect 2020 free cash

flow of $26 billion or higher with a full-year dividend payout ratio in the high 50s%.

The stock gained 6%.

Intel earnings barely beat estimates but its data-center chip sales flunked. Earnings fell 22% YoY while sales lowered 4%.

Here are the results:

EPS: $1.11 vs $1.10 est.
Revenue: $18.33B vs $18.22B est.

CEO Bob Swan had this to say:

Our teams delivered solid third-quarter results that exceeded our expectations despite pandemic-related impacts in significant portions of the business. Nine months into 2020, we’re forecasting growth and another record year, even as we manage through massive demand shifts and economic uncertainty. We remain confident in our strategy and the long-term value we’ll create as we deliver leadership products and aim to win share in a diversified market fueled by data and the rise of AI, 5G networks and edge computing.

$INTC was down 9% after-hours.

Southwest Airlines’ Q3 earnings beat on top and bottom lines but still weren’t great. Revenue was down 68% from the same quarter a year ago…

Here are the results:

EPS: ($1.99) vs ($2.44) est.
Revenue: $1.79B vs $1.68B est.

CEO Gary C. Kelly stated the following:

The pandemic persists along with the negative effects on air travel demand, resulting in our third quarter net loss of approximately $1.2 billion. We are encouraged by modest improvements in leisure passenger traffic trends since the slowdown in demand experienced in July. However, until we have widely-available vaccines and achieve herd immunity, we expect passenger traffic and booking trends to remain fragile. In response, we will continue to monitor demand and prudently adjust our available seat miles (ASMs, or capacity), while pursuing further revenue and cost opportunities. I am grateful to our People for maintaining a safe and reliable operation with industry-leading Customer Service, which generated the best Net Promoter Score in our history in third quarter.

$LUV flew 5.25%.

Small-Caps Strength

The small-caps led the major indices. $IWM has been outperforming the rest of the major index ETFs all month.

Here’s the performance since the beginning of October:

Small-caps have consolidated for the last two weeks is a breakout/fakeout imminent? Here’s the $IWM daily chart:

If we zoom out we can see that the small-caps are sitting on previous resistance since before the trade war. Here’s the weekly chart:

Goldman Got Got

Goldman Sachs will withhold $174M of pay to its executives to settle the Malayasian bribery scandal.

$GS will cut $31M from salaries to current CEO David Solomon, former CEO Lloyd Blankfein, and CFOs Stephen Sherr and Richard Gnodde.

David Solomon commented on his massive pay hit:

We must always remain open to improvement, learn from our mistakes, and accept the consequences when we fail.

Hey, if things with Goldman don’t work out, there’s always Solomon’s EDM career. He’s not that bad…

Here’s WSJ with the full story.

PTJs Current Market Outlook

Paul Tudor Jones appeared on CNBC early this morning. The legendary trader said “Robinhood Nation” might cause equity market jumps following a blue election result.

PTJ also mentioned that he thinks stimulus checks will rally the market in Q1 2021 but could cause long-term problems:

But the other side of that is what also happens to financial assets. I think under a blue wave, and the Biden tax plan, financial assets over the long run suffer a great deal.

See the full CNBC interview here.