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By Nicholas Jasinski | Thursday, November 21
Split Decision. The biggest companies on the market dampened a broad rally today, holding indexes to modest gains.
Nvidia stock rebounded from its morning losses after posting quarterly results yesterday evening, to close up 0.5%. It was the only member of the Magnificent Seven stocks to record a gain on the day. The Roundhill Magnificent Seven exchange-traded fund, which tracks the group, closed down 1.1%.
Alphabet was the worst off, down nearly 5%, after a legal filing by the U.S. Department of Justice detailed numerous remedies that it's seeking from the Google-parent, which has been found guilty of monopolistic behavior.
The remedies include ending payments to smartphone makers that make Google the default search engine on millions of devices, mandating that Google share more data with rivals, and splitting Chrome and Android from Google.
Barron's Adam Levine has all the details about the DoJ-Google fight and what it means for Alphabet here.
It was a better day for most other stocks: 438 S&P 500 constituents finished higher, as the index added 0.5%. But the Invesco S&P 500 Equal Weight ETF, which gives all 500 companies the same weight in the index, jumped 1.3%.
The big-tech swoon held the Nasdaq Composite to a flat finish, while the Dow Jones Industrial Average added 1.1%.
The price of gold rose for a fourth-straight day, to $2,672 an ounce and within striking distance of its late-October record high. Treasury yields rose slightly.
The biggest winner of the day may have been Bitcoin, which is closing in on the $100,000 milestone. More on that below.
DJIA: +1.06% to 43,870.35
S&P 500: +0.53% to 5,948.71
Nasdaq: +0.03% to 18,972.42
The Hot Stock: Super Micro Computer +15.1%
The Biggest Loser: Alphabet -4.7%
Best Sector: Utilities +1.7%
Worst Sector: Communication Services -0.3%
Crypto Rising
The price of Bitcoin traded as high as $99,027 today, up around 5% over the prior 24 hours. Crypto bulls see $100,000 as the next stop for the world’s largest cryptocurrency.
Bitcoin is up 40% since election day, as traders bet on a more favorable environment for crypto assets under a second Donald Trump administration. U.S. Securities and Exchange Commission Chair Gary Gensler—no fan of crypto—announced today that he will resign on January 20.
Barron's Bill Alpert wrote:
A long-running conflict involving the [SEC] was its enforcement of securities laws against cryptocurrency operators, a practice dating back to the tenure of SEC chair Jay Clayton under the first Trump administration. Gensler continued to pursue crypto intermediaries in actions alleging fraud, failure to register, and other misconduct. The crypto industry, and the SEC’s Republican commissioners, insisted that cryptocurrencies weren’t securities and merited brand new regulations.
Gensler’s departure announcement continued the crypto debate, pointing out that many courts had agreed that securities law applies to crypto. In the fiscal year ended September 2024, 18% of complaints received by the SEC were crypto-related, even though crypto markets are less than 1% of U.S. capital markets.
Trump's nominee for Commerce Secretary, Cantor Fitzgerald CEO Howard Lutnick, is seen as crypto friendly. The surge in interest goes beyond the potential for less regulation. On the campaign trail, the president elect raised the possibility of creating a Bitcoin strategic reserve, which would boost demand for the cryptocurrency.
There have been other recent tailwinds for Bitcoin, including heavy buying from MicroStrategy, the largest holder of the cryptocurrency. The firm held 331,200 Bitcoin as of Nov. 17, worth around $33 billion at current prices.
That's after spending $6.6 billion on Bitcoin purchases since the start of the month, financed with sales of stock. Yesterday, MicroStrategy said it was raising even more money from investors to buy still more Bitcoin.
Andrew Bary has the details:
MicroStrategy increased its convertible-bond offering to $2.6 billion from an originally planned $1.75 billion, and that means more buying of Bitcoin by the world’s largest corporate holder of the cryptocurrency.
The new convertible offering was priced with an interest rate of 0%, matching the lowest rates on new convertible bonds this year. It will have a conversion premium of 55% above the composite price of the stock Tuesday afternoon from 1:30 p.m. to 4 p.m. ET. That’s one of the largest conversion premium this year on a new convertible. The deal could be increased in size by $400 million if a group of initial buyers elect to purchase more of the securities.
The zero yield and high premium reflect strong investor demand for the securities and the high volatility on the stock, which makes the convert more appealing to arbitragers.
Last month, MicroStrategy management unveiled a plan to sell $42 billion of stock and bonds through 2027, earmarked for its Bitcoin investments.
Shares have risen even more than the cryptocurrency: They've added more than 500% since the start of the year.
And that's after their 17% drop today, following news that Citron Research had shorted the stock.
Read the rest of Andrew's report here.
The Calendar
S&P Global releases its Manufacturing Purchasing Managers’ Index for November tomorrow. Expectations are for a 48 reading, half a point less than in October.
What We're Reading Today
- Super Micro’s New Auditor Needs Its Own Turnaround. Why the Partnership Is Full of Risk.
- Ukraine Says Russia Fired an ICBM. Here’s Who Makes America’s ICBMs.
- Fed’s Goolsbee Sees ‘Critical Moment’ for Monetary Policy. Here’s Where He Sees Interest Rates Going.
- Eli Lilly and 2 More Drug Stocks to Buy After RFK-Inspired Drop
- Snowflake Stock Has Best Day Ever After Earnings
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