Individual Stocks Driving the Rally For a Change

Stock & bond market rallies continued today. The Dow, S&P 500 and Nasdaq are all in the green. Interest rates continue to moderate and that’s fueling gains. We got a report showing low figures for unemployment insurance claims. But most of today’s optimism I think centered around company-specific announcements, some of which I’ve summarized below.

Recruiter.com Chairman Evan Sohn says job candidate sentiment has been improving lately. Candidates feel OK about leaving their jobs to seek a better position, and aren’t fearful of a downturn in the job market. On the other hand, recruiters say more candidates are seeking fewer job openings so employers don’t have to compete as hard for talent. “The days of ‘get people to fill the seats’ are over.” Not surprisingly, compensation growth is slowing. The job market is gradually returning to normal after a very wacky pandemic era.

Dominoe’s Pizza (DPZ) stock is up over 2% this morning after announcing its new five-year growth initiative. Management now expects to open 5,500 new stores, and achieve 7% annual global sales growth (vs. prior guidance of 4-8%). The stock was hit hard last year as the company struggled with high input costs and a lack of delivery drivers. But the post-Covid hangover seems to be abating.

Abbvie (ABBV) announced its second acquisition in the past two weeks, and believe it or not, the stock is actually trading higher. The first was a deal to acquire Immunogen for about $10bil, and today’s announcement is a proposed deal to buy Cerevel for about $8.7bil. Of course, the deals need to clear regulatory hurdles and won’t likely close until mid-2024. Abbvie’s big sales driver, Humira, recent went off-patent and these deals are clearly aimed at re-filling the drug pipeline. The stock reaction suggests investors approve. As an aside, we should wonder whether this heralds a return of M&A activity to Wall Street. Positive stock reactions for Morgan Stanley (+1.3%) and Goldman Sachs (+.6%) this morning certainly suggest that possibility.

Google (GOOGL) launched its new AI model called Gemini, and the stock is up over 5% today. Gemini is an AI platform that can process and generate text, code, images, audio & video. It will compete directly with ChatGPT, but is meant to be much more versatile. Management’s goal is to position Gemini “more as a useful collaborator than less as a clever piece of programming.”