In the last 1 week ending 17 March 2023, the headlines was filled with the US bank crisis. Despite this crisis period, the S&P500 index was up 2.13% and the Dow Jones eked out a 0.13% gain. The Nasdaq performed better, recording a 5.33% gain for the week!
Even though the S&P500 index was up, there were a few underperforming sectors.
The financials and energy sectors recording the biggest sectoral decline. As we already know, the financial sector is in distress due to fears of potential bank failures, bailouts, and a risk of declines in asset values.
Energy stocks also declined in line with lower commodity prices as oil prices declined on fears that a financial crisis could reduce economic growth and lower oil demand.
It wasn’t a case of all doom and gloom, some sectors that performed well such as Technology, Communication Services (courtesy of Meta’s latest job cuts) and healthcare.
Here we look at 8 S&P500 stocks that went up more than 10% last week, despite a bank crisis.
Big Tech stocks
Alphabet, and Microsoft did well as the overall Nasdaq index was strong, buoyed by a potential slow down in the US Federal Reserve’s path of rate hikes due to the financial crisis. These stocks also announced positive news during the week, pushing them to the top of the list of outperformers.
1) Alphabet (NASDAQ: GOOG)
Alphabet unveiled new artificial intelligence (AI) tools in email, collaboration and cloud software for its enterprise cloud customers.
These customers will be able to use the new AI tools to make presentations and documents for training, take meeting notes and write emails to. Developers also now have access to some of the Google’s underlying AI models, allowing them to create their applications using Google’s technology.
The company had signed up a slew of AI startups as customers for its cloud service. These startups include Midjourney, which provides a system for image generation, and AI21, which focuses on large language model technology.
2) Microsoft (NASDAQ: MSFT)
Microsoft previewed a new AI “Copilot” for Microsoft 365 which offers a draft in Microsoft 365 applications, speeding up content creation and freeing up time.
The company also showcased a new business chat tool that can pull data and perform tasks across applications on a user’s written command.
Tech stocks – Chips and network equipment
Chip stocks such are both likely beneficiaries of the AI push by the big tech companies.
These chip companies have focused efforts on delivering chips and graphics processing units to support the industry need for processing power. These chips also go into data centres as there would likely be increased data storage needs.
3) Advanced Micro Devices (NASDAQ: AMD)
While AMD showed -25% earnings growth in the latest quarterly report, its revenue increased 16%. That coupled with investors optimism that the banking crisis could slow rate hikes could have pushed AMD price up.
4) Nvidia (NASDAQ: NVDA)
Alongside the sector’s ride on AI trend, Nvidia is also developing a cloud based AI platform to enable enterprises to develop their own AI solutions.
5) Arista Networks (NYSE: ANET)
Arista Networks also benefited due to its AI sector capabilities. Arista Networks counts Microsoft and Meta as customers and is a provider of cloud networking services for large environments. In recent years, the company built up its capabilities in AI by acquiring a network detection and response (NDR) platform, which combines AI with human expertise to autonomously hunt and respond to insider and external threats while providing triage digital forensics and incident responses.
The company is also working on systems and optics to meet demands for new network infrastructure arising from AI and machine learning.
Commodities – Gold
6) Newmont Corp (NYSE: NEM)
Newmont Corp is a gold miner with a global presence, with mines in North and South America, Africa and Australia.
As a gold miner, the company’s share price is highly correlated with the price of gold. The commodity was up 6.5% to $1990/oz as gold is deemed as a safe haven asset.
As Gold itself does not generate returns, Gold also increased on hopes that more bad news for the banking sector may lead to the Federal reserve pausing or slowing its path of rate hikes. Should this happen, the interest rate differential between Gold and Treasuries decreases, thus making gold more attractive.
Healthcare
7) Illumina’s (NASDAQ: ILMN)
Illumina’s shares jumped nearly 20% on Monday after Carl Icahn, a well known activist investor and corporate raider took a 1.4% stake in the company, amounting to more than $400 million.
Carl Icahn is pushing for Illumina to divest it’s recent acquisition of Grail, a blood based cancer detection kit manufacturer as the company continues to face pressures by regulators both in the US and Europe. Carl Icahn is also pushing for three board seats and has nominated potential candidates.
This relationship has gotten off to a rocky start as Illumina’s board has determined Icahn’s nominees lack relevant skills and experience, and that it is not in the best interests of shareholders to appoint Icahn’s three nominees to the Board of Illumina. Consequently, the Board recommends that shareholders not support Mr. Icahn’s nominees.
Financials
8) MarketAxess Holdings (NASDAQ: MKTX)
Marketaxess Holdings is the operator of the Marketaxess institutional credit trading platform. The company was one of the few bright lights in the Financial sector this week.
This could be due to heightened volatility and high trading volume in the bond market due to the banking crisis. A substantial shareholder, BlackRock also announced a week earlier that it increased its stake in the company from 8.8% to 10.2%, demonstrating confidence.
Closing statements
This week, 8 out of 500 S&P500 stocks went up more than 10% amidst a banking crisis. It is fair to say that as a general statement, when a stock delivers an outperformance as compared to the broader market, there tends to be a reason or a catalyst.
The catalyst could be a direct impact such as the announcement of positive news by Alphabet and Microsoft on its latest developments in the AI space. This also led to indirect beneficiaries such as chip stocks AMD & Nvidia as well as AI focused network plays such as Arista Networks.
Newmont gained on a macro development as gold prices outperformed due to its perception as a safe haven asset while Illumina gained on a company specific event as an activist investor takes a stake in the company.
Finally, Marketaxess’s outperformance demonstrates that there are always winners even in a crisis, as the company benefits from higher trading volume in its institutional credit platforms as higher volatility tends to lead to more trading by investors.
