Wall Street Lunch: Buckle Up For Black Friday

Listen below or on the go on Apple Podcasts and Spotify

More than 130 million people planned to shop for deals. (0:15) Bill Gates says AI could usher in a 3-day work week. (3:15) This quant portfolio now focuses on high yield. (3:43)

This is an abridged transcript of the podcast.

Our top story so far

Investors will have one eye on stocks and one eye on Black Friday deals during this shortened trading day.

Black Friday continues to be the most popular day to scout out deals, with 72% (130.7 million people) planning to shop, up from 69% in 2022.

Consumers are expected to spend an average of $875 on gifts, decorations, food, and other key seasonal items over the winter holidays. To meet the demand, the National Retail Federation expects retailers will hire between 345,000 and 450,000 seasonal workers, in line with 391,000 seasonal hires in 2022.

The investing side of retail has also been a mixed bag this year. The S&P 500 Consumer Discretionary Index (SP-25) soared 33% YTD, led by names like Amazon (AMZN), Chipotle (CMG), Expedia (EXPE), and Royal Caribbean (RCL).

The S&P 500 Consumer Staples Index has declined about 5%, weighed down by Conagra Brands (CAG), Dollar General (DG), Tyson Foods (TSN), and Walgreens (WBA). Divergence could also be seen throughout the retail sector last week, with shares of Target (TGT) soaring about 18% following its Q3 earnings report, while Walmart (WMT) dove 8% after striking a cautious tone on consumer spending.

In today’s trading

Stocks had a choppy day with low volume with the close at 1 p.m. ET. But by the early closing bell, they had barely budged from the open.

The lone indicator of the day – the S&P Global U.S. PMI Composite (Flash) – held steady at 50.7 in November, signaling continued marginal expansion in output during the month. While manufacturers and service providers each recorded another monthly increase in activity, the overall paces of expansion were slight.

Among active stocks

iRobot (IRBT) skyrocketed nearly 40% on a report that Amazon’s planned $1.4 billion takeover is set to get unconditional approval from the EU. The European antitrust regulator announced in July that it had opened an in-depth review into Amazon’s purchase of the Roomba maker. The UK’s antitrust regulator approved the transaction in June.

Nvidia (NVDA) has told customers in China it is delaying the launch of a new artificial intelligence chip made to abide by U.S. export regulations until the first quarter of next year. That’s according to Reuters. The delay was due to issues server makers were having with integrating the chip known as H20.

And Novo Nordisk (NVO) is set to roll out its highly popular weight-loss drug Wegovy in Asia, marking the medicine’s first foray into the continent. Wegovy, also known as semaglutide, is slated to launch in Japan on Feb. 22.

In other news of note

Bill Gates shared his thoughts on the potential impact of AI on jobs, saying the technology could lead to a three-day work week. Gates said on Trevor Noah’s podcast that rapidly-evolving AI won’t replace humans but will rather change things forever.

“If you eventually get a society where you only have to work three days a week, that’s probably OK,” he said, adding that there could come a day when people may not have to work so hard to make ends meet.

And in the Wall Street Research Corner

The Jefferies quant team is shaking up its portfolio of U.S. stocks after trailing the broader market this year.

The portfolio had been split between return-on-invested-capital names and growth-at-a-reasonable-price names.

With “quality being our favored style, we keep ROIC stars but introduce a value hedge through high-quality total yield stocks with low leverage” while closing out GARP, the quant team said.

Among the ROIC stars are Coca-Cola (KO), Alphabet (GOOG), and McDonald’s (MCD). In the high-quality total yield basket were Exxon Mobil (XOM), Aflac (AFL), and JPMorgan Chase (JMP).