Stocks shot out of the gate Monday and held gains into the close. Sentiment got a boost after the Senate advanced a key procedural measure that could end the record-long government shutdown later this week.
At the close, the blue-chip Dow Jones Industrial Average was up 0.8% at 47,368, the broader S&P 500 was 1.5% higher at 6,832, and the tech-heavy Nasdaq Composite had gained 2.3% to 23,527.
The Senate's short-term funding bill, which still needs to pass the upper chamber with a final vote before it heads to the House of Representatives, does not extend Affordable Care Act (ACA) tax credits, which are set to expire at the end of this year.
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It does reverse some of the mass federal layoffs the Trump administration enacted during the shutdown and guarantees pay for furloughed government workers.
"Global markets kicked off the week on a positive note, buoyed by signs that the U.S. government shutdown may soon be resolved," says Matt Britzman, senior equity analyst at Hargreaves Lansdown. "Investors tend to prefer stability and removing this uncertainty allows focus to shift back to earnings season, which is where the real story lies."
Indeed, roughly 61% of the 450 or so S&P 500 companies that have reported earnings so far have beat both the top and bottom lines, says BofA Securities strategist Savita Subramanian. This is better than the long-term trend of 41%, Subramanian adds, and in line with second-quarter earnings season.
Next up on the earnings calendar is Dow Jones stock Cisco Systems (CSCO, +1.4%), which will report after Wednesday's close.
UBS Global Research analyst David Vogt recently upgraded CSCO to Buy from Neutral (Hold) and raised his price target to $88 from $74, representing implied upside of 22% to current levels.
"We upgrade Cisco … based on a multi-year growth cycle driven by AI infrastructure demand, a large-scale Campus refresh cycle, and momentum in Security," says Vogt.
Nvidia stock rallies in risk-on session
But the main earning event occurs after the close next Wednesday, November 19, when artificial intelligence (AI) bellwether Nvidia (NVDA, +5.8%) discloses its third-quarter results.
Nvidia, along with several mega-cap tech stocks such as Broadcom (AVGO, +2.6%) and Advanced Micro Devices (AMD, +4.5%), rallied in Monday's risk-on session.
And UBS Global Research analyst Timothy Arcuri thinks there's more room to run. The analyst has a Buy rating and $235 price target on the blue chip stock ahead of earnings, representing implied upside of nearly 20% to current levels.
Arcuri expects Nvidia to report Q3 revenue of $56 billion, more than the $54 billion the company has guided for. He also sees "a number of favorable tailwinds" to fourth-quarter guidance, and expects the company to target revenue of $63 billion to $64 billion.
Buffett is "going quiet"
Berkshire Hathaway (BRK.B) today released Warren Buffett's annual Thanksgiving letter (PDF) to shareholders. The Oracle of Omaha, who will retire as CEO of Berkshire at the end of this year, said he is "going quiet." Well, "sort of."
Buffett noted that he will no longer be writing Berkshire's annual report; those duties will now fall to incoming CEO Greg Abel. However, he will continue with his annual Thanksgiving letter.
In this year's communication, Buffett reminisced about his life and said that he still spends five days a week at the office. "Occasionally, I get a useful idea or am approached with an offer we might not otherwise have received," he writes. "Because of Berkshire's size and because of market levels, ideas are few – but not zero."
Buffett also said that shareholders shouldn't fret about declines in the stock price. Shares are down about 8% since May's retirement announcement, though they remain a long-time market beater. And, as Buffett notes, "America will come back and so will Berkshire shares."
He concluded by sending out Thanksgiving wishes to all, "even the jerks," adding that "it's never too late to change."
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