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The Market Sum | INVESTOPEDIA

Insight after the bell

By Caleb Silver, Editor in Chief

Friday's headlines

1. Sellers take over Wall Street

2. Chart of the Day: From FAANG to MAGA?

Markets Close

Dow
25,989.30 -0.77%

S&P
2,781.01 -0.90%

Nasdaq
7,406.90 -1.70%

VIX
17.43 +3.30%

Bitcoin*
6,357.80 -1.36%

EUR/USD*
1.1337 -0.12%

*Currency markets and Bitcoin trade 24 hours, the figures here indicate movements between 9am and 4pm ET

#1 Sellers take over
Red across the board for U.S. equity markets to end the week and the usual suspects are to blame. Slowing global growth, rising rates, gridlock in Washington, concerns about the slowing housing market… Take your pick, but pessimism was in charge, especially in the tech sector where the Nasdaq fell nearly 2 percent.

Still, the post midterm rally on Wednesday was enough to lock in gains during a busy week for investors.

Year to date, we're higher for major US markets. Take a look:

DJIA: +4.75%
Nasdaq: +6.76%
S&P 500: +3.62%

Things we learned this week:

Inflation is Real: The Producer Price Index rose 0.6 percent in October. That's the biggest jump in 6 years. Higher food, gas and chemical prices led the surge.

FAANG Stocks lost $650 billion in market value in Red October. The harder they come, the harder they fall…

Hedge Funds had their worst month in 7 years in October. Exposure to large tech companies will do that to you. It's no secret that hedge funds are shrinking, several prominent funds are closing their doors and returning money to investors as it gets harder and harder to find Alpha in an algo-driven world. Circle November 15th on your calendars. That's the date that hedge fund customers can demand redemptions.

Oil Futures are in a Bear Market: Down more than 20 percent from their highs. For a few minutes in the late summer, we thought we'd see $100 crude again. We forgot that the global economy is slowing down.

GE may be in more trouble than we thought. JPMorgan downgraded the stock, which is already down more than 70 percent from its recent peak of $30, citing concerns that most of its businesses won't be profitable in 2020. Shares fell 9 percent today. Looks like the new CEO picked the wrong time to buy.

China's Hang Seng Index fell 6 weeks out of the past 7. $4.3 trillion of value has been wiped off that index since the beginning of the year. The strong dollar isn't helping -- but it might make trade negotiations a little more urgent at the end of the month.

Brexodus is happening. Bloomberg reports that major U.S. banks are moving hundreds of billions of dollars from London to other major European metropolises ahead of Brexit. Frankfurt stands to take in $250 billion by March, 2019.

Enter MAGA, Exit FAANG. No… Not Trump's slogan, although it was effective. MAGA = Microsoft, Apple, Amazon and Google, which was coined by the FT back in the summer when it was fun to talk about tech stocks. Microsoft has been quietly killing it over the past year, up 33 percent. It was left out of the FAANG party, so it deserves pole position in this new tech acronym. See our chart of the day below from our resident CMT, James Chen, for the tale of the tape.

What's Next: The midterm madness is behind us, for the most part. There is still some counting and recounting that needs to be done, but the political makeup of the country is what we thought it would be: Gridlocked. Earnings season is winding up, but there are a few notable companies reporting worthy of our attention:

Home Depot: We know the housing market is slowing, which means construction on new homes will be lighter, although renovations might pick up the slack.

Nvidia: A year ago, Nvidia was the hottest stock since Domino's, as crypto miners were using its graphic chips to mine cryptotokens. So 2017…

Walmart: Still one of the best proxies for consumer spending and trends. If inflation is blowing in the wind, Walmart will let us know. Shares are up 10 percent in the past month as investors flock to value.

On the economic calendar in the U.S., we'll get the Consumer Price Index reading on Wednesday. We learned today that producer prices were up 0.6 percent, which is a bigger jump than it sounds like. Economists are expecting CPI to have risen 0.1 percent in October, but inflation is happening. Compare your groceries receipt this weekend to a month ago and tell us we are wrong.

International headlines:
UK Economy Grows Strongly, But With Hints of Tougher Times Ahead
Emerging Market Stocks Buying Surges to Highest Since February - BAML

Chart of the Day: From FAANG to MAGA?
A few months back, Financial Times editor Richard Waters coined a new term to describe what he sees as the dominant market-leading tech stocks – Microsoft, Apple, Alphabet, and Amazon. His acronym for these stocks – MAGA – is clearly a play on President Trump's 'Make America Great Again' slogan, but Waters has some solid reasoning for proposing the replacement of the older FAANG (Facebook, Apple, Amazon, Netflix, Alphabet) acronym with MAGA.

He argues that Facebook and Netflix need not apply for membership in this new, more exclusive club of tech giants, for a couple of reasons. Netflix, he says, has too small a market capitalization to deserve a place in MAGA, even though its year-to-date performance has been pretty spectacular. As for Facebook, the scandal-plagued company has seen horrendous performance since July of this year, when the stock began to plummet and has now fallen by around 33% (as of Friday) from its late-July, all-time high.

The chart below shows the year-to-date performance of the four MAGA stocks, which, with the exception of Alphabet, have far outperformed the recently faltering S&P 500 this year. While Alphabet's performance has indeed lagged of late, it's unlikely to get kicked out of the club, as its market leadership and market capitalization cannot be ignored. Will the MAGA acronym actually stick, ultimately replacing FAANG? It's not likely, but at the very least, the components of the new grouping can truly be considered the most dominant tech giants currently leading the market.