Despite a short week of trading with the Thanksgiving Holiday, the major indices once again hit highs on Monday, and a few stocks made big moves during the first trading session of the week.
On Monday, the Dow Jones Industrial Average was up 0.5%, the S&P 500 gained 13.89 points or 0.7% and the Nasdaq Composite added 0.9%. The S&P 500's gain put the index at a new record, while the Dow industrials and Nasdaq Composite hit records last week.
Last month, analysts had estimated that the S&P 500 would close the year at 2,198, but that figure seems a little low now, if this rally continues.
The 2,000 mark for the S&P 500 is also one that traders will be watching for as it represents a key psychological barrier.
But if the 2,000 barrier is broken, it wouldn't be surprising if the market tumbles thereafter as the index is trading at 25.27 times its price-earnings ratio, while the historical mean is just 15.62. This is an indication that the market is already overpriced and a sign a correction is justified.
Here are three of the big movers on Monday.
1. Chesapeake Energy (CHK)
Shares of Chesapeake Energy rose more than 6% Monday, a week after quarterly statements showed that a number of hedge fund investors, most notably Carl Icahn, dumped their shares last quarter. But despite that downward pressure, rising commodity prices gave Chesapeake Energy a boost Monday.
As the cold weather moves in, natural-gas prices will likely continue to climb as demand increases. And if the Organization of Petroleum Exporting Countries can reduce output, as it has been promising, oil should also continue to rise.
These two factors would be big for Chesapeake Energy because the company has struggled with low commodity prices over the past year.
The company posted revenue of $9.16 billion, a 12.8% drop from a year earlier and below the $9.38 billion analysts were expecting. This also marked the fourth straight quarter of declining sales.
Earnings were 96 cents a share, below the $1.17 a share expected.
For the full year, the company expects earnings of $4.70 a share to $4.85 a share, below analysts' estimates of $4.98 a share.
The continued declining sales figures certainly play a role in Chief Executive Donnie Smith's decision to step down Jan. 1. But falling beef and chicken prices over the past year have played a large role in the declining sales numbers.
The one-two punch of a bad quarter and a chief executive leaving helped take down shares of Tyson Foods on Monday. But, the company operates with a strong market position, and when food prices rebound it will be a major catalyst for the revenue and earnings.
Investors should buy shares on the dip.
The move came after a Morningstar analyst released a positive report after his recent trip to Macau.
Dan Wasiolek wrote that he was encouraged by the infrastructure projects occurring in and around Macau, and he thinks these projects will help Wynn Resorts.
The analyst maintained his forecast of 7% annual sales growth over the next 10 years for Wynn Resorts in Macau.
Wasiolek increased his earnings before interest, taxes, depreciation and amortization margins estimate to 33% by 2025, which would be a boost from the company's 29% margin reported last year.
Short-term volatility remains with Wynn Resorts as its Palace property pulls traffic from other locations in Macau, but he thinks that the company will be a long-term winner.
Although Wasiolek's short-term prediction seems reasonable, forecasting 10 years out leaves a lot to chance, and investors shouldn't be in a rush to buy shares of Wynn Resorts or any other casino operator anytime soon.
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