US equity markets have finished Q3 on a strong note. In fact it was the best quarter in five years as stocks continued their upward move, helped by strong earnings, a robust US economy and an increasingly firm job market.
Going forward, the horizon looks clear. There’s no sign of a major storm that could thwart this longest bull-run in US history by some measures. Investors have begun to ignore the US-China trade war which still has the potential to slow the Chinese economy and raise prices on some consumer items in the US.
Still, with markets likely to continue their advances this coming week, there remain some trouble spots in the technology space that could dampen investor sentiment. Here are three large cap stocks to watch for unusual moves:
The crisis of confidence in the world’s largest social media platform, Facebook (NASDAQ:FB), took another ugly turn on Friday when the company disclosed that an unknown number of hackers obtained login access to as many as 50 million accounts. That access let the intruders act like users in the hacked profiles, or on any applications where they signed in using Facebook.
FB Weekly 2015-2018
This latest breach follows the devastating Cambridge Analytica scandal and allegations that Russian operators used the platform to influence the US elections. It could further shatter user confidence in the social media giant.
Facebook shares fell more than 2% after the news broke, extending the stock’s slide from a record high of $218.62 in late July to $164.46, where it closed on Friday. To date, FB shares have lost a quarter of their value since their high.
The extent of the damage to Facebook’s reputation from this latest data breach is hard to quantify at this point. It’s unclear what the hackers did with the access and who they were or whom they were trying to target. In this uncertain environment, the company’s shares will remain vulnerable and losses could extend. Investors should wait to hear what Mark Zuckerberg has to say about this latest infringement.
Tesla (NASDAQ:TSLA)—the company and the stock—is in the middle of a firestorm after the US Securities and Exchange Commission (SEC) decided to sue CEO and Chairman Elon Musk for securities fraud based on his tweet last month that told investors he had secured funding to take the company private. In its suit, the SEC sought unspecified monetary penalties and asked a judge to bar Musk from serving as an officer or director of a public company, the agency said in a lawsuit filed in New York last week.
TSLA Weekly 2015-2018
Musk misled investors by claiming falsely that he had lined up funding for the transaction, the suit alleges. Musk, reportedly initially refused to settle with the securities’ regulator to get the charges removed. He called the lawsuit a “distraction” in an e-mail sent to his employees, according to Bloomberg News, telling them to focus on the production of Model 3 sedan which is crucial for the company’s financial success.
However, on Saturday, news broke that Musk had reached a settlement with the SEC, which allowed him to remain as CEO of the embattled auto manufacturer, though he’ll be required to resign from his position as chairman for three years. The ongoing drama surrounding Musk personally has caused investors to loose faith in his leadership. Indeed, Tesla stock plunged 14% on the SEC move. Even with yesterday’s settlement—which could reduce some of the pressure on the stock, which closed at $264.77 on Friday, off 32% from its 52-week high of 387.46—TSLA shares are likely to remain volatile in the coming week.
Snack and beverage giant PepsiCo (NASDAQ:PEP) will report its third-quarter earnings on Tuesday before the market opens. Analysts expect EPS of $1.56, up from $1.491 a share a year earlier, on revenues of $16.44B.
The latest quarterly report will be the last for Indra Nooyi as CEO. She ran the company for 12 years and helped expand PepsiCo’s sales to $63 billion in an environment where consumers are shunning sugary drinks and adopting healthier options.
PEP Weekly 2015-2018
Strong sales of salty snacks, such as Frito-Lay chips, Tostitos and Ruffles, may continue to drive both top and bottom-line growth. These brands helped PepsiCo beat per-share profit estimates in the last quarter. A positive earnings surprise may help Pepsi shares move closer to the record high of $122.51 it reached early this year. The stock finished the week at $111.80 on Friday.