Market milestones and Thanksgiving reflections
In last week’s commentary, we wondered if equity markets would continue their post-election rally or slide into a deeper correction. This past week, the markets gave us an answer – a resounding vote of confidence. The S&P 500 posted five consecutive winning sessions, while the Dow Jones Industrial Average set a new all-time closing record on Friday at 44,296.51. Remarkably, this strength persisted despite setbacks for two major technology players, Nvidia and Google. Let’s dive deeper into this week’s developments.
Chief Investment Officer Thierry Hasse
Nvidia: Leading the AI revolution
Nvidia reported an astounding $35.08 billion in revenue for Q3 2024, up 94% from $18.12 billion in the same quarter last year (Source: Company investor relations). As a dominant force in the age of artificial intelligence, Nvidia’s chips are the cornerstone of AI-driven data centers. Yet, despite this remarkable growth, some investors anticipated an even stronger revenue forecast. This led to mild profit-taking, resulting in a temporary dip in the stock price. Nvidia’s fundamentals, however, remain robust, and its leadership in the AI space continues to inspire confidence.
Google: Navigating structural challenges
In contrast, Google faced more profound challenges last week. The U.S. Department of Justice demanded the company divest its Chrome browser and cease payments to third parties, such as Apple, to remain the default search engine on mobile devices. Additionally, rising competition in search advertising, fueled by the rapid rise of generative AI solutions like ChatGPT and Microsoft, weighed on investor sentiment. However, Google’s strengths as a cash-generating powerhouse remain intact. With shares trading at just 19 times projected 2025 earnings—making it more affordable than other mega-cap tech firms and even the S&P 500—it could represent a compelling opportunity for long-term investors (Source: Barron’s).
Fixed-income markets: A return to stability
After weeks of volatility, fixed-income markets settled into a narrower range. The 10-year Treasury yield closed the week at 4.4%, while the 2-year Treasury yield ended at 4.37%. A tug-of-war persists between the anticipated pro-growth policies of the incoming administration, which may push rates higher, and the Federal Reserve’s potential rate cuts to align with moderating inflation. This dynamic ensures that fixed-income markets will remain a focal point in the months ahead.
A time for gratitude
Thanksgiving week traditionally brings lighter market activity as many participants step away to enjoy the official kick-off of the holiday season. This year, investors have much to be thankful for, including the exceptional performance of U.S. companies, particularly in the ever-evolving field of technology. As we gather to celebrate our national holiday, we reflect on the spirit of innovation and resilience that defines our markets and our nation. From all of us at Elevage Partners, we wish you and your family a Thanksgiving filled with peace, joy, and abundance. Thank you for entrusting us with your financial journey. Happy Thanksgiving!
The information contained herein represents the views of Elevage Partners at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy of any data compiled herein In addition, there can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Any statement non-factual in nature constitutes only current opinion which is subject to change. These materials are provided for informational purposes only and do not constitute investment advice. Any reference to a security listed herein does not constitute a recommendation to buy, sell, or hold such security. Past performance is no guarantee of future results. The historical returns of any securities and/or sectors mentioned in this commentary are not necessarily indicative of their future performance.