US stock market on pace for best monthly performance in over a year

Indexes on pace for best monthly performance

Stocks solidified a fourth consecutive week of gains after bouncing between small gains and losses on Friday.

The S&P 500 rose 0.1%, while the tech-heavy Nasdaq Composite fell 0.1%. The blue-chip Dow Jones Industrial Average gained 0.3%, or 117 points. Friday’s trading session was shorter than usual due to the Thanksgiving holiday, with relatively light trading volume.

All three major indexes are on pace for their best monthly performance in more than a year.

Market rally leaves short sellers short

Hedge funds betting on a decline in US and European stock markets have suffered an estimated $43bn of losses in a sharp rally over recent days.

Short sellers, many of whom had built up bets against companies exposed to higher borrowing costs over the past year or so, have been caught out by a brutal “short squeeze” from the rebound in low-quality stocks

The Fed’s seeming reluctance to tighten monetary policy any further, plus weaker-than-expected US consumer price inflation data, have fuelled the rebound in the market.

This has forced short sellers to cover their negative bets, which has helped push share prices even higher.

Chipotle and Visa hit all-time highs

Stocks of Chipotle Mexican Grill (CMG:NYSE) hit all-time high levels back to its IPO in January 2006. higher restaurant prices have seen income and revenue increase for the Mexican food chain. Chipotle beat revenues and forecasts in its last quarterly earnings. The burrito chain also opened 62 new restaurants during the quarter.

Shares of Visa (V:NYSE) also trading at all-time high levels since its IPO in March 2000. Higher interest rates and retail spending optimism have continued the upward trajectory for the stock since the company’s last earnings report. In its recent financial results, Visa offered an optimistic view regarding consumer spending patterns going forward.

Both Chipotle and Visa shares finished the week about 2% higher

iRobot surges 39% on news of Amazon acquisition approval

Shares of iRobot (IRBT:NASDAQ), maker of Roomba vacuums, closed up about 39% Friday after a report from Reuters said the European Union is set to approve Amazon’s (AMZN:NASDAQ) $1.7 billion acquisition of the company.

Amazon announced its intention to acquire iRobot in August 2022 for $61 a share in an all-cash deal.

The acquisition marks Amazon’s fourth-largest deal, behind its $13.7 billion purchase of grocery chain Whole Foods in 2017, its $8.45 billion purchase of film studio MGM in 2021 and its $3.9 billion acquisition of boutique primary-care provider One Medical, announced last July.

The deal is still under review by the U.S. Federal Trade Commission. The U.K.’s Competition and Markets Authority said in June the deal would not result in “a substantial lessening of competition” in the U.K.

iRobot shares closed the week 36% higher, while Amazon shares finished 2.7% higher.

Nvidia delays rolling out new AI chip

Nvidia (NVDA:NASDAQ) shares fell 1.9% Friday after the chip company notified its China clients that it will delay until next year a new artificial intelligence chip designed to comply with U.S. export restrictions.

The new chip, called the H20, was being delayed due to issues server manufacturers were having to integrating the semiconductor into their products.

The delay to the H20 could be a setback for Nvidia, which makes around a fifth of its revenue from China and is facing competition from local players such as Huawei.

Home Depot builds up gains

As well as the H20, Nvidia is also gearing up to launch two other export-compliant chips called the L20 and L2.

Shares of Nvidia are down 3.4% for the week.