This Week in Emerging Growth: Maybe the “Second Amendment People” Can Take Care of the Economy, While They’re at It…
Well, it was another bizarre week on the campaign trail as both candidates visited the Metro Detroit area (note to major news outlets: Warren is not Detroit) to give economic policy speeches. That wasn’t bizarre, though. Rather, it was Donald Trump seemingly implying that it might be a good idea to assassinate his opponent and then stating that President Obama and Hillary Clinton “founded” ISIS, doubled down on the claim, then insisting that he was being “sarcastic.” It was a strong week for markets, however, as the Dow, S&P 500, and Nasdaq all hit record highs on Thursday, the first time all three did so concurrently since 1999.
Major News Recap:
· It was a rough week for Delta Airlines (DAL) after an outage hit the company’s computer systems and led to the cancelation of nearly 2,000 flights over multiple days, prompting a 3.5% decline in the company’s shares. Boy, too many stories like this and people may start to develop a negative outlook on airlines.
· Earnings season marched on, with Disney (DIS) reporting better-than-expected profits for Q3 that prompted a 2% gain in shares before it surrendered about half of those on Friday. Yelp (YELP) also surprised analysts with a swing to profitability in its second quarter, resulting in the stock gaining nearly 20% on the week.
· The Dow Jones Industrial Average, S&P 500, and Nasdaq all hit record highs on Thursday following a series of better-than-expected earnings reports that included retailers Macy’s (M), Kohl’s (KSS), and Nordstrom (JWN). This represented the first time all three major indices managed to hit record highs on the same day since 1999. Hey, does this mean Pets.com is poised for a comeback?
· In uncompensated labor news, Arianna Huffington announced that she would be stepping down for her role as the Editor-in-Chief of the blogging website that bears her name, the Huffington Post (AOL) so that she can focus on her new company, Thrive Global.
· Labor data showed a drop in American filing for unemployment benefits on Thursday, a sign that the job market continues to remain firm in early August. Knock on wood.
The Week’s Market Action
S&P 500: +0.91 or 0.04% to 2,184.05
Nasdaq: +11.32 or 0.22% to 5,232.90
Alibaba Group (BABA)
Up $13.66 or 16.15% to $98.25
Up $5.72 or 16.77% to $39.82
Mattress Firm Holding Corp (MFRM)
Up $34.10 or 114.66% to $63.84
Wells Fargo (WFC)
Down $0.79 or 1.62% to $47.90
KLA-Tenor Corp (KLAC)
Down $9.13 or 11.79% to $68.28
United States Steel Coproration (X)
Down $5.46 or 20.61% to $21.06
Emerging Growth Company News
It was a big week for major acquisitions as the Russell 2000 declined slightly despite gains in the major indices as small-cap earnings didn’t show as much strength as their mid- and large-cap brethren.
Russell 2000 Performance: -1.61 or 0.12% to 1,229.82
Emerging Growth Stock Performance:
DXP Enterprises (DXPE)
Up $11.48 or 69.45% to $28.01
Resolute Energy Corp (REN)
Up $7.77 or 115.11% to $14.43
Impax Laboratories (IPXL)
$9.06 or 29.43% to $21.72
SAExploration Holdings (SAEX)
$20.29 or 61.5% to $12.70
Emerging Growth News
· Retail goliath Wal-Mart (WMT) snapped up online retail, um, David, Jet.com for some $3.3 billion. Wal-Mart is likely doing this with an eye on Amazon (AMZN) and building an online infrastructure to help them stay better prepared for the future. I wonder if they’re going to get two-day shipping on this purchase…
· A recent study appears to indicate that the weakening in capital flow to startups from the second half of 2015 is an ongoing trend that has continued into the second quarter of 2016. Given that valuations reached an all-time high in mid-2015, this correction is likely no surprise, but it’s worth keeping an eye on to see how far things fall before finding a new bottom.
· Share in Impax Laboratories (IPXL) were plunging Tuesday after the company’s Q2 earnings showed lower-than-expected profits and weaker-than-expected guidance for the rest of the year. The company ultimately shed nearly 30% of its value by week’s end, falling to $21.72 a share.
· This week’s victim of the small-cap Biotech’s high-stakes game of “Cross Your Fingers and Wait for Clinical Results” was Array Biopharma (ARRY), which saw shares plunge more than 20% after the lung cancer drug it’s developing in a partnership with AstraZeneca (AZN), selumetinib, failed a Phase III clinical trial.
· Job-finding website Monster Worldwide (MWW) agreed to an acquisition price of $429 million, a premium of 23% over Monday’s close, from Randstad Holdings. In the event that Randstad decides to downsize, at least Monster’s employees will have an idea of how to get their job search started.
· Ocean Rid UDW (ORIG) delivered a big earnings beat in its Q2 earnings, released after the closing bell on Thursday. However, that particular piece of information was somewhat overshadowed by the company’s warning that adverse market conditions may force it to file for bankruptcy, which had shares down more than 60%.
Top Reads of the Week
· Equities.com announced a ground-breaking partnership with fin-tech company Tradier to offer unlimited trading for a monthly flat fee.
· Cannabis Business Leaders’ Advice for Entrepreneurs and Investors by Daniel Banas
· How Behalf is Powering Small Businesses with Easy Instant Access to Credit by Joel Anderson
· As Sam Sees It: Should Investors Rotate Into Growth Sectors? with Sam Stovall
· Can You Really Tame the Momentum Roller Coaster? by Wesley Gray