The problem with the outgoing stocks is they are mostly in industries with low growth prospects (toys for Hasbro), low profit margins (like J.B. Hunt in the trucking industry) or exposed directly to geopolitical risks (Wynn in China).
Five of the newcomers are tech or tech-related companies. Seattle Genetics, up 101% this year, is a hot biotech.
The new stocks are up an average 73.8% year to date. The weakest performer of the six is Splunk, still up nearly 37% compared with 34% for the Nasdaq 100 overall. It may also be a takeover candidate.
The departing stocks are up an average 21% this year, but two – Henry Schein and Mylan – are down 12.7% and 30% for the year, respectively.
2. Retail Sales Slipping at the Worst Time
Economic data was lost in the shuffle for the second Friday in a row as the continuous – and at times somewhat contradictory — statements from the U.S. and China on the phase 1 trade deal garnered all the attention.
This time it was a tepid retail sales report that lost the spotlight. But investors should take note as the latest numbers don’t bode well for a festive holiday shopping season.
for November rose just 0.2%. That was well off the 0.5% rise that economists had predicted according to forecasts compiled by Investing.com. , which exclude autos, ticked up 0.1%, shy of the 0.4% rise expected.
The consensus estimates may have been so strong due to bullish reports of record Black Friday sales, although Cyber Monday sales did land in December.
The numbers look especially anemic in comparison to the first eight months of the year, where retail sales averaged a monthly rise of 0.7%.
“Spending at traditional department stores alone was down 7% from a year ago, while spending at clothing and accessory stores was off 3% from a year ago,” Grant Thornton Chief Economist Diane Swonk wrote. “That bodes well for those looking for more discounts this holiday season but suggests another round of retail bankruptcies in early 2020 as the broader retail market continues to adjust to consumers’ shifting preferences for online instead of in-store shopping.”
“The consumer should look a lot stronger in December, too late for many retailers to move the needle on margins, which are already razor-thin,” Swonk added.
Keith McCullugh of Hedgeye Risk Management tweeted that his Nowcast for fourth-quarter GDP ticked down to 0.36% after the retail sales numbers arrived.
The Atlanta Fed GDP Nowcast remained at 2% for 4Q, the same as last week.
3. Machine Over Man
The effect of computerized trading and algorithms has been very clear to anyone following the stock market lately amid the trade-war-induced swings.
The indexes and futures have been spiking and diving based on one headline or tweet and then just as quickly reversing course on new information before retail investors have a chance to react.
The Economist analyzed the rise of the machines in October, looking at $31 trillion in U.S. equities and it concluded that more are managed by computers and humans.
Statista broke this down with a very handy chart this week.
Looking at the chart, 35.1% of those U.S. equities are now managed by automatic, or computerized, funds. That’s followed by 25.3% managed by entities and governments and insurers, 24.5% managed by humans and 15.3% held by companies.