Check out the companies making headlines before the bell: Trump Media & Technology — Shares of the Truth Social parent, which has a majority ownership by Republican presidential candidate Donald Trump, climbed about 9% during premarket trading on Election Day . The stock has been seen as a proxy for betting on the former president’s likelihood of winning the race for the White House. Palantir — The cybersecurity stock surged 14% on strong third-quarter results . Palantir reported 10 cents in earnings per share on $726 million in revenue. Analysts surveyed by LSEG had forecast earnings of 9 cents per share and $701 million in revenue. The company cited “unrelenting AI demand” and a 30% jump in revenue from the prior year. NXP Semiconductors — Shares slipped 7% after the Netherlands-based semiconductor conductor provided disappointing fourth-quarter guidance, pointing to macro weakness in the Americas and Europe. On the other hand, NXP’s third-quarter earnings beat analysts’ expectations by 2 cents per share, while its $3.25 billion revenue was in line with estimates. Wynn Resorts — The resort and casino operator’s stock fell more than 2% in premarket trading following weaker-than-expected quarterly results. Wynn’s adjusted earnings came in at 90 cents a share on $1.69 billion in revenue, which fell short of Wall Street’s estimates on the top and bottom lines, according to LSEG. Dollar Tree — The discount retailer advanced 4% after announcing that CEO Rick Dreiling had stepped down . Chief Operating Officer Michael Creedon will serve as interim CEO. Dollar Tree also reiterated its third-quarter guidance. Hims & Hers Health — The telehealth stock popped 7.2% after third-quarter earnings exceeded expectations of analysts polled by FactSet on both lines. The San Francisco-based company also issued stronger-than-anticipated guidance for revenue in both the current quarter and full year. Cleveland-Cliffs — Shares slipped 6% after the steel producer posted revenue in its latest quarter of $4.57 billion, disappointing analysts polled by LSEG who were looking for $4.77 billion. Lattice Semiconductor — Shares tumbled more than 11% after the semiconductor design company posted disappointing earnings and revenue guidance for the current quarter. However, Lattice reported results that were in line with analysts’ expectations for its third quarter. Cirrus Logic — The semiconductor supplier sank nearly 11% after it forecast that revenue for its current quarter would range between $480 million to $540 million. However, analysts surveyed by LSEG had been looking for $590 million. DuPont de Nemours — The chemicals stock climbed more than 2% after posting third-quarter adjusted earnings of $1.18 per share, higher than the $1.03 analysts polled by LSEG had expected. On the other hand, the company’s $3.19 billion in revenue missed estimates of $3.20 billion. Restaurant Brands International — Shares slipped 2% after the Burger King parent reported adjusted earnings of 93 cents per share , lower than the 95 cents a share expected from analysts polled by LSEG. Revenue also missed, coming in at $2.29 billion versus the $2.31 billion consensus estimate. Diamondback Energy — The energy stock shed 2% after reporting third-quarter adjusted earnings per share of $3.38. Analysts had expected $3.98, according to LSEG. Diamondbank’s $2.65 billion beat the $2.44 billion consensus. Boeing — Shares moved up 1.6% after machinists voted 59% in favor of a new labor deal on Monday, ending a more than seven-week strike that was affecting the company’s aircraft production. The deal includes 38% wage increases over four years, among other improvements, for workers. Astera Labs — The semiconductor solutions designer soared 24% after reporting a third-quarter adjusted earnings and revenue beat. Astera also guided for fourth-quarter earnings and revenue figures that were above what analysts had expected, according to FactSet. Marqeta — Shares tumbled 39% after the modern card issuing platform’s third-quarter loss exceeded estimates by 1 cent. Marqueta’s $128 million in revenue was just shy of the $128.1 million consensus from FactSet. The company also said it expected revenue in the fourth quarter to increase 10% to 12% from a year earlier, while analysts surveyed by LSEG had looked for growth of more than 17%. As a result, firms including Deutsche Bank, Wells Fargo and UBS downgraded their ratings on the company, with Deutsche saying uncertainty around its core business will linger. — CNBC’s Michelle Fox, Alex Harring, Hakyung Kim, Yun Li, Sarah Min and Pia Singh contributed reporting.
Investors may want to consider adding exposure to the world’s second-largest emerging market.
According to EMQQ Global founder Kevin Carter, India’s technology sector is extremely attractive right now.
“It’s the tip of the spear of growth [in e-commerce] … not just in emerging markets, but on the planet,” Carter told CNBC’s “ETF Edge” this week.
His firm is behind the INQQ The India Internet ETF, which was launched in 2022. The India Internet ETF is up almost 21% so far this year, as of Friday’s close.
‘DoorDash of India’
One of Carter’s top plays is Zomato, which he calls “the DoorDash of India.” Zomato stock is up 128% this year.
“One of the reasons Zomato has done so well this year is because the quick commerce business blanket has exceeded expectations,” Carter said. “It now looks like it’s going to be the biggest business at Zomato.”
Carter noted his bullishness comes from a population that is just starting to go online.
“They’re getting their first-ever computer today basically,” he said, “You’re giving billions of people super computers in their pocket internet access.”
“I think the best case scenario is we’re going to continue to see mortgage rates hover around six and a half to 7%,” said Jordan Jackson, a global market strategist at J.P. Morgan Asset Management. “So unfortunately for those homeowners who are looking for a bit of a reprieve on the mortgage rate side, that may not come to fruition,” Jordan said in an interview with CNBC.
Mortgage rates can be influenced by Fed policy. But the rates are more closely tied to long-term borrowing rates for government debt. The 10-year Treasury note yield has been increasing in recent months as investors consider more expansionary fiscal policies that may come from Washington in 2025. This, combined with signals sent from the market for mortgage-backed securities, determine the rates issued within new mortgages.
Economists at Fannie Mae say the Fed’s management of its mortgage-backed securities portfolio may contribute to today’s mortgage rates.
In the pandemic, the Fed bought huge amounts of assets, including mortgage-backed securities, to adjust demand and supply dynamics within the bond market. Economists also refer to the technique as “quantitative easing.”
Quantitative easing can reduce the spread between mortgage rates and Treasury yields, which leads to cheaper loan terms for home buyers. It can also provide opportunities for owners looking to refinance their mortgages. The Fed’s use of this technique in the pandemic brought mortgages rates to record lows in 2021.
“They were extra aggressive in 2021 with buying mortgage-backed securities. So, the [quantitative easing] was probably ill-advised at the time.” said Matthew Graham, COO of Mortgage News Daily.
In 2022, the Federal Reserve kicked off plans to reduce the balance of its holdings, primarily by allowing those assets to mature and “roll-off” of its balance sheet. This process is known as “quantitative tightening,” and it may add upward pressure on the spread between mortgage rates and Treasury yields.
“I think that’s one of the reasons the mortgage rates are still going in the wrong direction from the Federal Reserve’s standpoint,” said George Calhoun, director of the Hanlon Financial Systems Center at Stevens Institute of Technology.
Jason Wilk, the CEO of digital banking service Dave, remembers the absolute low point in his brief career as head of a publicly-traded firm.
It was June 2023, and shares of his company had recently dipped below $5 apiece. Desperate to keep Dave afloat, Wilk found himself at a Los Angeles conference for micro-cap stocks, where he pitched investors on tiny $5,000 stakes in his firm.
“I’m not going to lie, this was probably the hardest time of my life,” Wilk told CNBC. “To go from being a $5 billion company to $50 million in 12 months, it was so freaking hard.”
But in the months that followed, Dave turned profitable and consistently topped Wall Street analyst expectations for revenue and profit. Now, Wilk’s company is the top gainer for 2024 among U.S. financial stocks, with a 934% year-to-date surge through Thursday.
The fintech firm, which makes money by extending small loans to cash-strapped Americans, is emblematic of a larger shift that’s still in its early stages, according to JMP Securities analyst Devin Ryan.
Investors had dumped high-flying fintech companies in 2022 as a wave of unprofitable firms like Dave went public via special purpose acquisition companies. The environment turned suddenly, from rewarding growth at any cost to deep skepticism of how money-losing firms would navigate rising interest rates as the Federal Reserve battled inflation.
Now, with the Fed easing rates, investors have rushed back into financial firms of all sizes, including alternative asset managers like KKR and credit card companies like American Express, the top performers among financial stocks this year with market caps of at least $100 billion and $200 billion, respectively.
Big investment banks including Goldman Sachs, the top gainer among the six largest U.S. banks, have also surged this year on hope for a rebound in Wall Street deals activity.
Dave, a fintech firm taking on big banks like JPMorgan Chase, is a standout stock this year.
But it’s fintech firms like Dave and Robinhood, the commission-free trading app, that are the most promising heading into next year, Ryan said.
Robinhood, whose shares have surged 190% this year, is the top gainer among financial firms with a market cap of at least $10 billion.
“Both Dave and Robinhood went from losing money to being incredibly profitable firms,” Ryan said. “They’ve gotten their house in order by growing their revenues at an accelerating rate while managing expenses at the same time.”
While Ryan views valuations for investment banks and alternative asset manages as approaching “stretched” levels, he said that “fintechs still have a long way to run; they are early in their journey.”
Financials broadly had already begun benefitting from the Fed easing cycle when the election victory of Donald Trump last month intensified interest in the sector. Investors expect Trump will ease regulation and allow for more innovation with government appointments including ex-PayPal executive and Silicon Valley investor David Sacks as AI and crypto czar.
Those expectations have boosted the shares of entrenched players like JPMorgan Chase and Citigroup, but have had a greater impact on potential disruptors like Dave that could see even more upside from a looser regulatory environment.
Gas & groceries
Dave has built a niche among Americans underserved by traditional banks by offering fee-free checking and savings accounts.
It makes money mostly by extending small loans of around $180 each to help users “pay for gas and groceries” until their next paycheck, according to Wilk; Dave makes roughly $9 per loan on average.
Customers come out ahead by avoiding more expensive forms of credit from other institutions, including $35 overdraft fees charged by banks, he said. Dave, which is not a bank, but partners with one, does not charge late fees or interest on cash advances.
The company also offers a debit card, and interchange fees from transactions made by Dave customers will make up an increasing share of revenue, Wilk said.
While the fintech firm faces far less skepticism now than it did in mid-2023— of the seven analysts who track it, all rate the stock a “buy,” according to Factset — Wilk said the company still has more to prove.
“Our business is so much better now than we went public, but it’s still priced 60% below the IPO price,” he said. “Hopefully we can claw our way back.”