U.S. stocks higher at close of trade; Dow Jones Industrial Average up 0.97%

Despite widespread anticipation that NVIDIA Corp. 's quarterly results would dictate Wall Street's year-end trajectory, the stock market delivered a robust weekly rebound — even in the absence of its AI darling.

While the semiconductor titan beat analyst expectations on both earnings and revenue for the third quarter, Nvidia's stock remained flat for the week.

Alphabet Inc. , the parent company of Google, faced sharp turbulence. Shares tumbled after the U.S. Department of Justice called for the divestiture of Chrome in a bid to curb Google's dominance in search and digital advertising.

The sell-off wiped out over $120 billion in market capitalization on Thursday alone.

A recent Benzinga poll indicates 64% of respondents oppose breaking up Alphabet, with YouTube viewed as the company's most valuable asset.

On the economic front, U.S. private sector activity expanded significantly in November, as reflected in S&P Global's Purchasing Managers' Index surveys. The services sector, in particular, surged at its fastest pace since March 2022, while price pressures continued to recede, creating less headwinds for the Federal Reserve.

Bitcoin’s rally shows no signs of cooling, with the cryptocurrency notching its fourth consecutive week of gains and hovering around the historic $100,000 threshold.

The U.S. dollar also maintained its upward momentum, rising for the eighth straight week to reach two-year highs. This latest rally, however, stemmed largely from external turmoil, as escalating geopolitical tensions between Russia and Ukraine, coupled with worsening economic momentum in Europe, triggered sharp weekly sell-offs in the euro and the British pound.

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The Dow Jones Industrial Average closed at an all-time high Friday as traders analyzed the latest economic data.

The Dow jumped 1% to 44,296.5, while the S&P 500 rose 0.4% to 5,969.3. The Nasdaq Composite added 0.2% to 19,003.7. Industrials saw the biggest gain among sectors, while communication services, utilities, and technology closed lower.

For the week, the Dow increased almost 2%, while the S&P 500 and the Nasdaq grew 1.7% each.

In economic news, US private sector output rose to the highest level since April 2022 despite continued contraction in manufacturing, while the year-ahead outlook hit a 2.5-year high, according to S&P Global's flash purchasing managers' index.

"The survey's price gauge covering goods and services signaled only a marginal increase in prices in November, pointing to consumer inflation running well below the (Federal Reserve's) 2% target," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

US consumer sentiment continued to grow in November, while year-ahead inflation expectations dropped to the lowest since December 2020, final results from the University of Michigan's Surveys of Consumers showed.

"Substantial" uncertainty remains over the implementation of President-elect Donald Trump's economic agenda, Surveys of Consumers Director Joanne Hsu said.

The US two-year yield rose three basis points to 4.38% Friday, while the 10-year rate dropped 1.6 basis points to 4.42%.

In company news, Copart shares jumped 10%, the second-best performer on the S&P 500 and the Nasdaq, after the company late Thursday posted fiscal Q1 results that grew year over year.

Boeing was the top gainer on the Dow Friday, up 4.1%. The plane maker said Thursday it won a contract valued at $2.38 billion to build an additional 15 units of KC-46A Pegasus tankers for the US Air Force.

Intuit saw the steepest decline on the S&P 500 and the Nasdaq, down 5.7%. Late Thursday, the financial technology platform issued a downbeat fiscal Q2 revenue outlook.

Palo Alto Networks shares decreased 3.6%, the second-worst performer on the S&P 500 and among the worst on the Nasdaq, as HSBC downgraded the cybersecurity firm to reduce from hold and adjusted its price target to $291 from $304.

West Texas Intermediate crude oil increased 1.5% to $71.17 a barrel Friday.

Crude futures were headed for a weekly gain amid elevated tensions between Russia and Ukraine, Saxo Bank said in a report. There are also doubts about the Organization of the Petroleum Exporting Countries and its allies unwinding voluntary production cuts next year due to market oversupply, according to the report.

Gold rose 1.3% to $2,708.80 per troy ounce, while silver gained 1.1% to $31.30 per ounce.

Nvidia’s NVDA quarterly results were excellent, with the chip giant not only beating estimates and raising guidance but also achieving top- and bottom-line growth rates that are typically associated with start-up players.

Nvidia’s Q3 earnings increased +106.3% from the year-earlier period to $19.37 billion while revenues were up +93.6% year-over-year to +35.08 billion.

To get a sense of the market’s lukewarm reaction to these otherwise impressive results from Nvidia, take a look at the chart below that plots the stock price relative to how estimates consensus EPS estimates have evolved over time.

The chart's light blue and red lines represent the evolution of consensus EPS estimates for 2024 and 2025, respectively. The steepness of those lines shows how persistent the favorable revisions trend has been, with analysts seemingly struggling to catch up with how strong underlying business trends have been for Nvidia.

Nvidia’s stock market momentum has made its market capitalization the highest of the Magnificent 7 group at $3.59 trillion, surpassing Apple at $3.45 trillion and Microsoft at $3.07 trillion. Investors’ lukewarm reaction suggests that they have become used to getting far bigger guidance upgrades than what they received this time around. Nvidia’s upgraded guidance is solid, but relatively underwhelming by the company’s own standards.

We don’t want to come across as making too big of a deal of the stock’s reaction to the quarterly results. After all, Nvidia shares are up +191.3% over the past year and have handily outperformed the Zacks Tech sector (up +32.5%), the S&P 500 index (up +30.4%), and the Mag 7 group (up +20.6%).

Beyond Nvidia, the focus lately has been on the Retail sector, with several major conventional operators coming out with quarterly results. Through Friday, November 22nd, we have seen Q3 results from 29 of the 34 Retail sector companies in the S&P 500 index.

Regular readers know that Zacks has a dedicated stand-alone economic sector for the retail space, which is unlike the placement of the space in the Consumer Staples and Consumer Discretionary sectors in the Standard & Poor’s standard industry classification.

The Zacks Retail sector includes not only Walmart, Home Depot, and other traditional retailers, but also online vendors like Amazon AMZN and restaurant players.

Total Q3 earnings for these 29 retailers that have reported are up +12.8% from the same period last year on +5.6% higher revenues, with 58.6% beating EPS estimates and only 51.7% beating revenue estimates.

The comparison charts below put the Q3 beats percentages for these retailers in a historical context.

As you can see above, members of the Zacks Retail sector have struggled to beat estimates in Q3, with the trend particularly notable on the EPS beats front that are tracking below the 20-quarter low at this stage.

Concerning the elevated earnings growth rate at this stage, we like to show the group’s performance with and without Amazon, whose results are among the 24 companies that have reported already. As we know, Amazon’s Q3 earnings were up +71.6% on +11% higher revenues, as it beat EPS and top-line expectations.

As we all know, the digital and brick-and-mortar operators have been converging for some time now. Amazon is now a decent-sized brick-and-mortar operator after Whole Foods, and Walmart is now a growing online vendor. This long-standing trend got a huge boost from the Covid lockdowns.

The two comparison charts below show the Q3 earnings and revenue growth relative to other recent periods, both with Amazon’s results (left side chart) and without Amazon’s numbers (right side chart).

Q3 Earnings Season Scorecard

Through Friday, November 22nd, we have seen Q3 results from 476 S&P 500 members, or 92.2% of the index’s total membership. We have another 8 S&P 500 members on deck to report results this holiday-shortened week, including Dell, HP, Best Buy, and others.

Total earnings for these 476 companies that have reported are up +8.1% from the same period last year on +5.5% higher revenues, with 73.7% of the companies beating EPS estimates and 61.8% beating revenue estimates.

The proportion of these 476 index members beating both EPS and revenue estimates is 51.1%.

The comparison charts below put the Q3 earnings and revenue growth rates and the EPS and revenue beats percentages in a historical context. The first set of comparison charts show the earnings and revenue growth rates.

One significant drag on the aggregate growth pace has been the Energy sector, whose Q3 earnings were down -22.9% from the same period last year on -2.7% lower revenues. Q3 earnings for the index would be up +10.6% on +6.3% higher revenues had it not been for this Energy sector drag. The comparison charts below show the ex-Energy earnings and revenue growth pace across different periods.

The second set of comparison charts compare the Q3 EPS and revenue beats percentages in a historical context.

The comparison charts below spotlight the revenue performance and the blended beats percentage for this group of 476 index members.

As you can see above, the growth trend appears stable-to-positive, though fewer companies are beating consensus estimates relative to other recent periods. In fact, both the EPS and revenue beats percentages are tracking below the 20-quarter averages.

The Earnings Big Picture

Looking at Q3 as a whole, combining the results that have come out with estimates for the still-to-come companies, total earnings for the S&P 500 index are expected to be up +8.1% from the same period last year on +5.7% higher revenues.

The chart below shows the Q3 earnings and revenue growth pace in the context of where growth has been in the preceding four quarters and what is expected in the coming three quarters.