Wall Street closed out the week on a positive note, and with a resumption of the rotation into value stocks we've discussed over the past few days.
Friday saw several major indices finish in record territory, including the Dow Jones Industrial Average, which steadily rose throughout most of the day to finish 1.4% higher to 29,479.
Boeing (BA) got back into its early-week form with a robust 5.9% improvement. But it was Cisco Systems (CSCO, +7.1%) that led the Dow's 30 components after reporting better-than-expected revenues and profits while also providing hope that its four-quarter streak of revenue declines might soon come to an end.
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"Some investors have expressed concern that Cisco risks becoming the IBM of several years ago, when that company masked a multi-year stream of quarterly revenue declines with share buybacks that artificially lifted EPS," says Argus Research analyst Jim Kelleher, who just reiterated his Buy rating on CSCO. "While IBM was being outflanked in new markets such as cloud, social and mobile, Cisco does not appear to be losing share; instead, its challenges mainly derive from pandemic-impacted demand."
"Cisco is also maintaining high pretax margins and continuing to generate strong free cash flows. The company is successfully shifting its mix away from hardware and toward an integrated software, hardware and services solution."
Cisco's report was hardly unusual, however: S&P 500 components have been knocking down profit targets left and right. "84% of S&P 500 companies have reported a positive EPS surprise for Q3," says FactSet's John Butters. "If 84% is the final percentage, it will tie the mark for the highest percentage of S&P 500 companies reporting positive EPS surprises since FactSet began tracking this metric in 2008."
Walmart (WMT) and Home Depot (HD) are among major companies that will report next week as the Q3 earnings season starts to wind down.
Outside of Cisco, tech continued to underperform, especially work-from-home plays. Zoom Video (ZM, -5.9%), for instance, just finished with a miserable week that saw the video-conferencing provider lose 19% amid vaccine optimism.
Other action in the stock market today:
- The small-cap Russell 2000 (+2.1% to 1,744) broke into record territory for the first time since August 2018.
- The S&P 500 closed up 1.4% to a record 3,585.
- The Nasdaq Composite gained 1.0% to 11,829.
- Gold futures contracts for December improved by 0.7% to $1,886.20 per ounce.
- U.S. crude oil futures settled 2.4% lower at $40.13 per barrel, but still finished the week up 8.1%.
Growth Will Be Just Fine
Looking to add a jolt of energy to your 401(k) in 2021 and beyond? Don't sleep on growth investing – yes, many analysts have been calling for a rotation into value, but many of those very same analysts expect that change in leadership to be temporary.
Sure, growth investing is more difficult to do in a 401(k) where you can't hold individual blue-chip growth stocks or high-potential small caps. But T. Rowe Price has you covered.
As part of our continued analysis of the 100 most popular 401(k) funds – including fund picks for retirement savers from Vanguard and Fidelity – we now take a look at T. Rowe Price funds most often found in 401(k) plans. Founder Thomas Rowe Price is considered by many to be the father of growth investing, so don't be surprised to learn that many of the firm's dazzling funds focus on fast-growing stocks.
Here, we examine a dozen T. Rowe Price products you might find in your 401(k) plan, and assign each of them a Buy, Hold or Sell rating.
Kyle Woodley was long BA as of this writing.
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