Stocks started off comfortably higher on Friday, but lost momentum as the session progressed. Still, the Nasdaq Composite remained strong through the close as several mega-cap stocks continued to rise. The S&P 500 fell into negative territory in late trading, and the blue-chip Dow Jones Industrial Average ended in the red as McDonald’s continued to struggle.
In terms of numbers, the Nasdaq rose 0.6% to 18,518. The S&P 500 fell 0.03% to 5,808, the Dow fell 0.6% to 42,114 and the MCD fell 3%. The fast food giant closed down 8% for the week after the Centers for Disease Control and Prevention (CDC) announced it was investigating an E. coli outbreak linked to McDonald’s Quarter Pound Burger.
Capri Holdings (CPRI) was another notable loser on Friday after a U.S. judge on Thursday blocked the luxury retailer’s proposed merger with Michael Kors’ parent company Tapestry (TPR, +14%). As a result, prices plummeted by 49%.
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Both companies argued that “handbags are non-essential goods, and consumers can control prices by not buying them if they become too expensive.” However, the judge argued that “handbags are a way for many women to express themselves through fashion.” “It ignores the fact that it’s not only important, but it also helps us express ourselves.” their daily lives,” Reuters reported.
Capri and Tapestry said they intend to appeal the ruling.
Deckers soar after beat-and-raise quarter
On the positive side of the books, footwear maker Deckers Outdoor (DECK) jumped 11% after beating second-quarter sales and bottom line expectations and raising its full-year sales and profit forecasts. did.
“Due to strong product response, deep innovation pipelines for both brands, brand recognition overseas that is still low but still building, and management’s thoughtful approach to market segmentation, DECK is on a solid growth trajectory. “We think we’re in a good position to maintain it,” he said. Joseph Civello, an analyst at Trust Securities, said:
“Hoka’s continued outperformance and the success of our higher-end franchises strengthen our confidence in our long-term profit growth opportunities,” Civello added.
Apple downgraded before performance
Elsewhere, Apple (AAPL) rose 0.4% despite KeyBank analyst Brandon Nispel downgrading the tech stock from standard weight (equivalent to hold) to underweight (equivalent to sell). .
According to Barron’s, Nispel believes customers will prefer to buy the new iPhone SE model, which is expected to be available at a lower price in early 2025, rather than the more expensive iPhone 16. This “could cannibalize iPhone 16 sales,” he said, adding that a successful iPhone SE launch would increase iPhone sales but lower average selling prices.
The downgrade comes just before Apple appears on the earnings calendar after the close of trading next Thursday. For fiscal fourth quarter results, analysts expect earnings per share of $1.55, up 6.2% year-over-year (YoY), and revenue of $94.4 billion, up 5.5% YoY .
Durable goods orders fell in September
In economic news, this morning the Census Bureau announced that new orders for durable goods fell 0.8% in September. Excluding defense, new orders fell 1.1%.
“Demand for durable goods remains weak,” said Wells Fargo economist Shannon Seely Grein. But with lower interest rates and a presidential election on the horizon, “companies may soon have the confidence they need to support capital spending,” she added.
The University of Michigan announced that its consumer confidence index in October rose to 70.5 from 70.1 in September, marking the third consecutive month of increase and the highest level in six months.
“Despite growing concerns about income growth and employment, consumers remain confident that inflation is easing,” said Jeffrey Roach, chief economist at LPL Financial.
Roach notes that investors are now focused on next Friday’s jobs report. He said a stronger-than-expected result “could force the Fed to hold its next meeting, but that’s not our base case.”
