Shares fell on Friday to end a losing week, but Wall Street's major indices stayed near their recent record highs amid continued optimism about the progress of the COVID-19 vaccine.
Both the and published their first weekly declines in three weeks, at 0.6% and 1% respectively. The tech heavy suffered a loss of 0.7% in that time frame, but scored his sixth consecutive weekly profit, which is 1%.
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Investors will be looking at new headlines about the COVID-19 vaccine and developments surrounding the pandemic over the next week.
Markets will also pay close attention to the outcome of the all-important Federal Reserve on Wednesday. There is also important data for November, as well as the latest series of Markit Purchase Manager Indexes and regional Fed surveys scheduled for the coming week.
Regardless of which direction the market is heading, below we highlight one stock that is likely to be in high demand in the coming days and another that could suffer additional losses.
Stock to Buy: Tesla
The moment Tesla (NASDAQ 🙂 bulls have been waiting for has finally arrived. The Elon Musk-led electric vehicle company will acquire real estate investment trust Apartment Investment & Management Co. (NYSE :), or AIMCO, when it joins the benchmark after close on Friday, December 18.
Tesla will also join the, replacing Occidental Petroleum (NYSE :), to become the largest stock ever added to the index.
With a market capitalization of approximately $ 580 billion, the electric car maker will be the sixth most valuable company in the S&P 500, behind Apple (NASDAQ :), Microsoft (NASDAQ :), Amazon (NASDAQ :), Facebook (NASDAQ): ), and Google parent alphabet (NASDAQ :).
TSLA shares have skyrocketed this year, climbing 629% to a string of new record highs in recent weeks. The stock closed at $ 609.99 on Friday, not far from the record high of $ 653.88 reached on December 9
While benchmark index changes are usually not an event, individual and institutional investors dived into the news, sending Tesla shares a 49.5% rise since its first announcement in the S&P on November 16 .
And the party could only begin. In a sign that bodes well for Tesla, 14 of the 15 stocks added to the S&P 500 so far this year have seen their share price rise since being added to the index, including Paycom (NYSE :), Etsy (NASDAQ :), Teradyne (NASDAQ 🙂 and Carrier Global (NYSE :).
There are currently more than $ 11.2 trillion in assets compared to the S&P 500, with approximately $ 4.6 trillion of the total indexed funds, meaning significant portfolio adjustments will need to be made to accommodate Tesla. come.
According to Howard Silverblatt, senior index analyst for S&P Dow Jones Indices, that could result in $ 80 billion worth of Tesla stock being bought by index investors.
Despite strong earnings and high valuations, we expect rising demand resulting from the inclusion in the S&P 500 index is likely to push TSLA stocks higher in the coming week.
Stock To Dump: GameStop
GameStop (NYSE :), whose stock ended Friday at $ 13.31, had its worst week since late October, with a decline of more than 21%, as investors rushed to the exit after the release of disappointing. The weekly decline saw stocks rebound their strong gains for the year, with GME shares now up 118.9% since the start of the year.
At current levels, GameStop shares are now 31.4% below their recent high of $ 19.42, reaching November 30, the highest level since January 2018.
The Grapevine, Texas-based video game retailer reported a sharp drop in net profit in the third quarter last week due to the negative impact of pandemic store closings and increasing competition from digital game sellers.
GameStop announced a loss of $ 0.53 per share, up from a loss of $ 0.49 per share in the same period last year. Sales, meanwhile, fell 30% year-on-year to $ 1.0 billion, which is below estimated sales of $ 1.09 billion.
Same-store comparable store sales decreased 24.6% from the same quarter a year earlier, worse than expected for a 20.5% decline.
"Our third quarter results were in line with our cushioned expectations and reflected the workings during the last few months of a seven-year console cycle and a global pandemic weighing on sales and revenues," said George Sherman , GameStop's chief executive said in a statement.
In addition to the alarming drop in top and bottom line numbers, investors aggressively sold the stock after the company said it would consider raising capital through a shelf registration and prospectus supplement, which would allow it to sell stock through at – the market supply.
Stock offerings – essentially the opposite of the share buyback program that some major activist investors are calling for – will likely dilute the value of existing stock.
Taking this into account, GME stock appears to be under additional pressure in the coming days as it grapples with the rising popularity of video game streaming and increasing digital downloads of the new PlayStation 5 (NYSE 🙂 and Xbox Series X (NASDAQ: NASDAQ: console games.
