Wall Street’s major averages rose on Friday at the start of a shortened trading day. 

At the time of writing, the Dow Jones Industrial Average was up 0.3%, while the S&P 500 index added 0.2%.

The Nasdaq Composite index was up 0.1% from the previous close. 

David Morrison, senior market analyst at Trade Nation, said:

US exchanges were closed for the holiday and have a shortened session today, so markets should be quite thin and volumes low.

Despite this, investor sentiment remains positive as far as equities are concerned, and the ongoing pullback in bond yields is providing a welcome tailwind.

Some of the upside momentum on Friday came from the rise in chip stocks. 

Chip stocks rose on Friday after Bloomberg reported that the Biden administration was considering additional barriers on the sale of semiconductor equipment to China that weren’t as strong as previously anticipated. 

Friday’s rise in stocks comes as traders will look to close out the month on highs.

All three US benchmarks have risen sharply this month after President-elect Donald Trump won the 2024 US elections. 

The Dow Jones has added more than 7% in November, which is the best month since November 2023, according to CNBC. 

Both the S&P 500 and the Nasdaq Composite will end the month with 5% gains each. 

Tesla shares up 33% in November

Shares of Tesla have rallied 33% in November after Trump’s win.

The electric vehicle maker’s CEO has close ties with Trump, which is viewed by traders as a positive for the business. 

The company returned to a $1 trillion market cap in November, and was also headed for its best month since January 2023. 

Musk recently got assigned a starring role by Trump, leading a so-called Department of Government Efficiency along with Vivek Ramaswamy, a former Republican presidential candidate, CNBC reported. 

Chip equipment stocks rise

Shares of chip equipment stocks moved higher on the Bloomberg report. 

The report said that President Joe Biden was considering more restrictions on sales of semiconductor equipment and AI memory chips to China. 

According to the report, the restrictions could come as soon as next week and impact Micron Technology, along with some Taiwan-based companies and suppliers to Hauwei Technologies. 

Shares of US-based companies such as Applied Materials, Lam Research and KLA Corp rose sharply on Friday. 

Shares of Applied Materials rose nearly 4%, while those of Lam Research popped close to 6%. Shares of KLA Corp rose more than 4%. 

Meanwhile, prominent stock NVIDIA Corporation was also up nearly 3% on Friday. 

Bullion set for worst month so far in 2024

Gold and silver prices were on track to close out November with hefty declines. 

Most of the declines in the precious metal complex was due to a surging dollar after Trump’s election win. 

Gold slipped more than 2% so far in November, which marks its worst month since September 2023, when it fell 5%. 

Silver, meanwhile, has dropped 4% this month. This will mark the metal’s worst month since December of last year, when it fell more than 6%. 

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AMD stock price has underperformed its top peers, especially NVIDIA, but technicals point to a potential rebound. It was trading at $137 on Friday, down by almost 40% from its highest level this year. In contrast, NVIDIA has more than doubled and become the biggest company in the world.

AMD stock price could rebound

Technicals point to a potential rebound of the AMD share price after months of weakness. The chart below shows that the stock has moved slightly below the 50% Fibonacci Retracement level, as we predicted in June.

The risk, however, is that the AMD share price has formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA). In most periods, this is one of the riskiest patterns in the market.

On the positive side, the stock has formed an inverse head and shoulders chart pattern. In most periods, this is one of the most bullish chart patterns. It comprises a right and left shoulder and a head, which is around $120. 

The other positive thing is based on the Elliot Wave pattern. On the daily chart, the stock has formed several waves of the Elliot Wave. The first wave ended at $133, while the second corrective ended at $93, the 78.6% retracement level.

The third wave, usually the longest, ended at the year-to-date high of $227. It has now completed the fourth wave, meaning that the stock could stage a strong comeback. If this happens, the next point to watch will be at $227, which is about 66% above the current level.

On the flip side, a move below the key support at $120 will invalidate the bullish view because it will cancel the inverse H&S pattern. If this happens, the next point to watch will be at $90, the 78.6% retracememt at $90.

AMD’s AI business is growing

The potential catalyst for the AMD share price is its artificial intelligence business, which has started growing in the past few quarters. This growth is mostly because the company has created GPUs that work almost the same way as those made by NVIDIA and are lower priced.

At the same time, there are concerns about the scarcity of NVIDIA’s chips. As such, whenever that happens, many customers move to the next logical alternative, which, in this case, is AMD.

The most recent results showed that AMD delivered a record data center revenue of $3.5 billion in the third quarter, a 122% increase from the same period last year. This growth was mostly because of its ramp up of AMD Instinct and AMD EPYC CPU sales.

Analysts believe that AMD’s market share could move from roughly 10% today to as high as 30% in the next few years as its demand rises. 

The company’s client segment also continued doing well, with its sales jumping by 25% in the last quarter to $1.9 billion. As with the previous quarters, AMD’s gaming and embedded divisions continued to continued to weaken, dropping by 69% and 25%, respectively.

Valuation concerns remain

The other key challenge to have in mind is that AMD is highly overvalued compared to other companies. Data by SeekingAlpha shows that the company’s price-to-earnings ratio stood at 40.95, higher than the sector median of 25. Its price-to-sales ratio is 8.6, higher than the industry median of 4.

These are big numbers but can be justified because of its top-line revenue growth and its potential to become a key NVIDIA rival. Analysts expect AMD’s revenue will be $25.67 billion this year, up by 13% a year ago. The revenue growth will be 27% in 2025 to $32.61 billion.

There are signs that AMD’s business will do better than what analysts expect as it has done before. For example, the company’s earnings have beaten the consensus estimates in the last five consecutive quarters. 

The risk, however, is that demand for AI chips may moderate in the coming years as the top purchasers lower their purchases. Besides, there are signs that demand for AI in the real world is not growing as was widely expected. Indeed, NVIDIA’s recent results confirmed that the industry was starting to cool.

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The global toy market, a $108.7 billion industry in 2023 (Circana), is witnessing a significant shift. Fast-growing e-commerce platforms Shein and Temu, known for their ultra-low prices and vast selection of primarily unbranded goods, are aggressively expanding into the toy sector, capitalizing on the lucrative holiday shopping season.

While established giants like Amazon, Walmart, and Target remain dominant (holding nearly 70% of the US market, according to D.A. Davidson analyst Linda Bolton Weiser), Shein and Temu are rapidly gaining traction, particularly among budget-conscious consumers.

Shein and Temu’s growing market share

Shein, renowned for its inexpensive apparel, reports double-digit year-over-year growth in toy sales volume.

Meanwhile, Temu is experiencing a surge in toy-related searches.

Kantar data reveals that 13% of US holiday shoppers plan to purchase gifts from Temu this year, a substantial increase from 9% in 2023.

Further supporting this trend, Facteus data shows a rise in US credit card spending on both platforms this month compared to last year.

The influx of shoppers to these platforms is even influencing major toy manufacturers.

MGA Entertainment, the creator of L.O.L. Surprise! dolls, is considering selling its products on Shein and Temu to reach a broader consumer base, as CEO Isaac Larian told Reuters, “We want to reach (all levels) of consumers, not just the people with average incomes.”

This decision highlights the growing appeal of these platforms to budget-conscious shoppers, particularly those earning less than $50,000 annually, a demographic significantly impacted by rising consumer prices since 2021, according to Bank of America credit card data.

European markets show a similar trend, particularly among 18-to-34-year-olds in France, Germany, Italy, Spain, and the UK, with 39% having purchased toys or games on these platforms since the start of 2024, and that number rising to 60% among younger consumers, according to a September study by Circana.

The counterfeit controversy

However, the rapid growth of Shein and Temu in the toy sector hasn’t been without controversy.

Concerns over counterfeit and unauthorized products are prominent.

Mattel, the maker of Barbie, confirmed it does not directly sell to these platforms and its distributors are not authorized to do so, as reported by Reuters.

Yet, listings of Mattel’s Uno cards on Temu and Hot Wheels cars on Shein included claims of authenticity, raising questions about intellectual property rights and product legitimacy.

Responding to these concerns, a Shein spokesperson told Reuters that suppliers are required to certify product authenticity and non-infringement, with a dedicated team ensuring compliance.

Temu, after receiving inquiries regarding the unauthorized Uno listings, promptly removed the products and launched an investigation, stating this is part of their “standard operating procedure for dealing with products suspected of non-compliance or subject of a complaint.”

Addressing concerns

Despite the opportunities, concerns remain regarding counterfeit products, particularly “dupes,” or imitation products.

MGA Entertainment’s CEO, Isaac Larian, expressed concerns about counterfeit versions of its new Miniverse brand, highlighting the potential safety hazards posed by improperly labeled or unsafe imitations.

Spin Master has also voiced concerns about counterfeit versions of its “Ms Rachel” doll on Temu, highlighting the lack of safety testing for these knockoffs.

Temu responded that they investigated and removed these products upon notice from Spin Master.

Fat Brain Toys president Mark Carson remains hesitant, preferring to observe the situation before deciding to sell on these platforms.

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Black Friday, the traditional kickoff to the Christmas shopping season, arrived with a twist this year: a significantly shortened timeframe.

With only 26 days between Thanksgiving and Christmas, compared to 31 days in 2022, retailers faced a compressed selling season, adding pressure to their holiday sales strategies.

This compressed timeframe, coupled with inflation-weary consumers, created a unique challenge for businesses aiming to maximize profits during this crucial period.

The National Retail Federation, a US retail trade group, anticipates approximately 85.6 million shoppers hitting the stores this year, a notable increase from last year’s 76 million.

Deals and discounts dominate the scene

From exclusive Taylor Swift merchandise at Target to heavily discounted puffer coats at Walmart, retailers worldwide pulled out all the stops to entice bargain-hunting customers.

In Europe, the Black Friday rush began earlier, with British retailers like John Lewis offering substantial discounts on electronics and other goods – up to £300 ($381) off Samsung TVs and significant reductions on Nespresso machines and Apple products.

Currys, a London-listed consumer electronics retailer, reported strong sales of popular items such as the PlayStation 5, air fryers, and retro technology.

The enthusiasm wasn’t limited to electronics; clothing retailers also participated, with Kate Isaienko, a shopper in London, highlighting the rising clothing prices at Zara since moving from Ukraine and seizing the Black Friday discounts as an opportunity to save.

US retailers join the fray

Across the Atlantic, major US retailers like Walmart and Target opened their doors early on Black Friday, offering a wide array of deals.

Walmart, with its 4,700 US stores, started its Black Friday sales on November 11th, offering discounts on electronics, toys, clothing, and kitchen appliances.

Target, with 1,963 locations, also initiated its sales on Thanksgiving, featuring significant price cuts on electronics, toys, and kitchen appliances.

Furthermore, Target is leveraging exclusive merchandise, such as “Wicked”-themed products, to draw customers.

The psychology of impulsive spending

“With fewer days to shop, consumers are more likely to make spontaneous purchases, contributing to retail growth during the holiday season,” Marshal Cohen, chief retail adviser at Circana, told Reuters.

This highlights the crucial role of impulse buying in boosting holiday sales for retailers.

Beyond the doorbusters

While traditional “doorbuster” deals remain a Black Friday staple, the shift toward online shopping continues.

To counter this trend, many major brick-and-mortar retailers are increasingly focusing on creating immersive, in-store experiences to draw customers.

Examples include Ray-Ban’s augmented reality glasses demonstrations, extra-large TVs at Best Buy, and spa services at Nordstrom.

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The Gap stock price rose sharply earlier this month when the company reported encouraging financial reports. It rose to a high of $25.87 on November 22, its highest level since June 12 of this year. It remains in a local bear market after falling by 20% from its highest level this year.

The Gap stock in the spotlight amid market share gains

GAP shares have been in the spotlight in the past few months as investors watched its ongoing turnaround amid a soft retail environment. 

The most recent results showed that the company was gaining market share across its brands, which include firms like Gap, Banana Republic, Old Navy, and Athleta.

These results showed that its net sales rose by 2% in the third quarter to $3.8 billion, while its comparable sales were up by 1%. 

The company is also doing well in terms of profitability as its gross margins rose to 42.7%. Most importantly, it is managing its inventory well. The results showed that its inventory dropped by about 2% to $2.33 billion.

Most parts of The Gap’s business did well in the third quarter. Old Navy’s net sales rose by 1% in the third quarter, while Banana Republic rose by 2%. Gap’s sales were up by 1%, while Athleta jumped by 4%.

Athleta is The Gap’s answer to Lululemon Athletica and is one of the fastest-growing brand in the athleisure industry. 

Analysts are generally optimistic about GAP’s business trajectory. The average revenue estimate for the year is about $15 billion, a 0.73% increase from 2023. Its estimated revenue for the coming year is $15.24 billion, up by 1.63% on an annual basis. Gap often does better than expected in most cases.

Most importantly, The Gap’s earnings are expected to continue improving. The annual earnings per share estimate will rise from $1.34 in 2023 to $2.01 this year, followed by $2.09 in the next financial year. 

Most analysts have a neutral view of The Gap, with those at BMO and Evercore having an outperform rating. Wells Fargo has an overweight rating, while Guggenheim has a buy one. UBS is less optimistic with a sell rating on the stock. The average Gap stock forecast is $28, higher than the current $24.25. 

One reason to be optimistic is that The Gap is a fairly cheap company. It has a forward price-to-earnings ratio of 12, much lower than the sector median is 20. Its trailing P/E multiple is 11.2, lower than the industry median of 19. 

Also, a discounted free cash flow (DCF) model shows that the company was trading at 28% below its current price of $24.

The Gap stock price analysis

GAP chart by TradingView

The daily chart shows that the GAP share price was trading at $24.25 on Friday, down from the year-to-date high of $30.3. It has remained above the ascending trendline that connects its lowest swings since January this year.

This trendline is notable because it was the neckline of the head and shoulders chart pattern, a popular bearish reversal pattern. 

Therefore, there is a risk that the stock will have a bearish breakout in the next few weeks. If this happens, it may drop to about $20, which is about 20% below the current level. 

$20 is also a notable level since it is along the neckline of the H&S pattern. A drop below that level will point to more downside, potentially to $18.6, the 50% retracement level. If this happens, it may drop to $15.9, the 61.8% retracement point, and 35% below the current point. The bearish view will become invalid if the stock rises above the right shoulder level at $26.

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