The stock market is sending signals that a Biden-led blue wave is getting less certain, says one Wall Street strategist
- While the polls suggest a blue wave victory is in reach for Democrats this November, the stock market isn’t so sure, according to a note from Evercore ISI.
- Wall Street strategists have been forecasting that a blue wave would likely be positive for stocks on hopes of a large stimulus deal shortly after the election, which would help spur a surge in value and cyclical stocks.
- But this week’s rotation out of value and into tech suggests that chances of a blue wave in November are less likely, according to the note.
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Wall Street is increasingly expecting a blue wave victory for Democrats this November after the polls close, which would likely lead to the reflation trade: a surge in cyclical and value stocks at the expense of technology and growth stocks.
But recent trading activity in the stock market suggests odds of a blue wave are less likely, according to a Tuesday note from Evercore ISI.
Specifically, this week’s rotation out of small cap and value and into large cap and growth could be chalked up to declining odds of a Democratic sweep, according to the note.
The firm pointed to the October surprise in North Carolina’s Senate race between Republican Thom Tillis and Democrat Cal Cunningham as evidence for declining chances of Democrats overtaking the Senate.
“The Democratic ‘dream fiscal program’ odds are lower,” Evercore said as explanation for what is driving the rotation back into tech.
Read more: Jeff James has crushed the market this year thanks to a stock pick that’s soared 1,155%. He shares another bet he expects to deliver similar returns – and lays out 3 additional opportunities in tech.
The firm did concede that other factors could be moving tech stocks, including excitement around
Apple’s (AAPL) – Get Report much-anticipated iPhone 12 lineup revealed Tuesday received a generally tentative set of upward thumbs from Wall Street analysts, who praised the advent of 5G and the pricing of the handsets but were slightly more suspect of how much demand there will be for the new models.
Apple on Tuesday unveiled four different iPhone models, including the iPhone 12 mini, a 5.4-inch model starting at $699; a 6.1-inch device starting at $799, a 6.1-inch Pro model starting at $999, and a 6.7-inch pro model starting at $1,099.
Apple also introduced its HomePod Mini smart speaker, which includes a touch panel on its top for play/pause and volume options, along with a light-up display to indicate use of the Siri assistant.
“The pricing dynamics are the killer app for the phone launch,” Piper Sandler analyst Harsh Kumar wrote in a note to clients. “Pricing was lower than our expectation, which is important in the current global pandemic.”
“iPhone 12 mini hits the magic $699 price point,” Loup Ventures’ Gene Munster wrote on Twitter. “That’s a big deal and slightly expands iPhone’s addressable market. This is the first time in 7 years (iPhone 5S) that smaller form factor is part of flagship lineup.”
Wedbush Securities’ Daniel Ives also expressed optimism that the pricing lineup would be enough to convince current iPhone owners to upgrade, noting that “350 million of 950 million iPhones worldwide are currently in the window of an upgrade opportunity,” which he believes will “translate into an unprecedented upgrade cycle,” particularly in China.
Goldman Sachs analyst Rod Hall also was impressed with the iPhone lineup additions, noting in his own research note that Apple’s iPhone event had a “few unexpected twists,” including the introduction of the iPhone 12 mini and Magsafe charging, though he
CEO of The Robin Hood Foundation, Wes Moore, speaks during The Robin Hood Foundation’s 2018 benefit at Jacob Javitz Center on May 14, 2018 in New York City.
Kevin Mazur | Getty Images
One of Wall Street’s favorite charitable organizations has raised several million dollars to support a fund that invests in nonprofit groups run by people of color.
The Robin Hood foundation’s Power Fund kicked off this summer as the coronavirus pandemic spread and amid nationwide protests sparked by the police killing of George Floyd on Memorial Day.
Robin Hood funds over 200 poverty-fighting programs in New York City. It is led by Wes Moore, an author and former investment banker at Citigroup.
“I think part of the thing we’ve seen is that everything we’ve witnessed post George Floyd, these aren’t new things because of George Floyd,” Moore told CNBC. “I think that the conversations we’ve been able to have with — whether they be donors or CEOs of companies — is about the more we look into the patterns and practices that we had even prior to all this, the more it just highlights that we have to move with a sense of urgency.”
Robin Hood’s board is full of Wall Street leaders, including chairman John Griffin, who was once a hedge fund manager; and the group’s vice chair, Dina Powell McCormick, an executive at Goldman Sachs. David Solomon, Goldman Sachs’ CEO, is also a board member.
Robin Hood’s latest 990 disclosure form shows that it raised almost $140 million in 2018 through contributions and grants. The group raised nearly $130 million the prior year.
The Power Fund, which has raised over $6 million on top of the seed money provided by the Robin Hood Foundation, has moved to support five organizations including America on Tech, which runs
American Well AMWL shares jumped on Monday after coverage of the stock was initiated by a number of analysts four weeks following the Boston telehealth company’s debut on the New York Stock Exchange.
Amwell shares were trading at $34.29, up 5%, at last check. Here’s what Wall Street is saying:
Morgan Stanley analyst Ricky Goldwasser initiated coverage of the stock with an equal weight rating and $35 price target, saying the company’s telehealth platform is poised to gain share within a “large and expanding” market.
UBS’s Kevin Caliendo initiated coverage of Amwell with a neutral rating and $29 price target.
Caliendo says the neutral rating reflects the stock’s 81% climb since its IPO in mid-September. But the company has the potential to accelerate its growth above the estimated 27% revenue growth excluding acquisitions that Caliendo anticipates.
Goldman Sachs initiated coverage of Amwell with a neutral rating and $31 price target.
Analyst Robert Jones says American Well “is a leading telehealth vendor with a diversified customer base and a clear runway for recurring 20%-plus revenue growth, gross-margin expansion and representing one of the most top-of-mind themes in health care,” according to Bloomberg.
Cowen’s Charles Rhyee initiated coverage of Amwell with an outperform rating and $41 price target, which is a 30-times multiple to his 2022 sales estimate of $333 million.
“Telehealth is currently one of the biggest themes in health care, and … AMWL should benefit from its focus on providers, who we see being a key driver in the next leg of growth in telehealth,” Rhyee said, according to Bloomberg.
Palantir Technologies, a company that helps government agencies analyze vast amounts of digital data, saw its shares jump in its Wall Street debut on Wednesday in a sign of continued investor excitement for money-losing software companies.
The company’s shares began trading at $10 on the New York Stock Exchange, a 38 percent increase from a “reference price” of $7.25 set Tuesday evening, and closed the day at $9.73.
Palantir is one of many companies rushing to go public before the election on Nov. 3. It hit the market the morning after a presidential debate seemed to foreshadow political turmoil that could rattle investors in the coming months.
Still, as the rest of the American economy has struggled with mass unemployment and the closing of businesses big and small, Wall Street has been welcoming to new public offerings. The three months that ended with September were the busiest quarter for initial public offerings in 20 years, with 81 offerings set to raise $28.5 billion, according to Renaissance Capital, which tracks I.P.O.s.
Shares of Asana, a collaboration software provider, and Velodyne, which makes sensors for self-driving cars, also began trading on Wednesday. Asana’s stock rose, valuing the company at $4.4 billion, up from its last private valuation of $1.5 billion, while Velodyne’s stock fell 24 percent to $18.69.
Recent successful debuts have included the gaming company Unity Software, the software provider JFrog, and Snowflake, a business technology company whose value increased more than fivefold in its initial public offering this month.
Airbnb, DoorDash and several other tech companies are also expected to go public in the coming months.
Investors embraced Palantir despite its inability to turn a profit and the many controversies swirling around it. Among them is the highly unusual way Palantir has kept most of its corporate voting power in