Economists polled by The Wall Street Journal forecast the index to fall to 65%.

Any number over 50% signals expansion, and numbers above 60% are exceptional.

In a rarity, all 18 of the service sectors tracked by ISM said they grew in November.

Demand is not a problem. Americans are still spending lots of money these days after hunkering down early in the pandemic.

The biggest problem is supplying all the services that customers want. Companies can’t find enough people to fill a near-record number of open jobs. They’ve also struggled to obtain badly needed supplies.

Read: November’s 210,000 new jobs marks worst headline number of 2021—but there are bright spots

The shortages have pushed up wages and prices and contributed to the biggest surge in U.S. inflation in 31 years.

“Seeing inflationary forces in the marketplace, which is resulting in suppliers raising their prices moving into 2022,” said an executive at financial company.

Some executives said the worst of the supply-chain bottlenecks might be easing, but they expect the problems to be ongoing.

“Supply chain issues persist, but we’re evolving to overcome or manage them better than in the past,” another executive said.

In recent trading, the Dow Jones Industrial Average
DJIA,
-0.53%
and S&P 500
SPX,
-1.02%
both fell.

But further testing is required to determine whether it is more transmissible than other variants, including delta, more lethal or more resistant to vaccines and treatments.

WHO spokesman Christian Lindmeier told a U.N. briefing in Geneva that vaccine makers should get ready to tweak their products, and Ugur Sahin, head of Germany’s BioNTech
BNTX,
+1.23%
said that company should be able to adapt the vaccine it co-developed with Pfizer
PFE,
+0.77%
relatively quickly.

Sahin has said this week that the current vaccine should still offer protection against severe disease, even with the many mutations carried by omicron.

See also: Omicron variant unlikely to cause severe illness in vaccinated people, BioNTech founder says

 Multiple cases of the omicron coronavirus variant have been detected in New York, health officials said Thursday, including a man who attended an anime convention in Manhattan in late November and tested positive for the variant when he returned home to Minnesota, as the Associated Press reported.

“No cause for alarm. We just want to make sure that the public is aware of information when we receive it,” said Gov. Kathy Hochul.

The U.S. has already implemented restrictions on travel from South Africa and neighboring countries and President Joe Biden on Thursday called for unity as his administration rolled out a plan for fighting COVID-19 during the winter, while also pushing back on Republican opposition to his vaccine mandate for large employers.

Read:Biden says he doesn’t expect government shutdown ‘unless somebody decides to be totally erratic’

“While my existing federal vaccination requirements are being reviewed by the courts, this plan does not expand or add to those mandates,” Biden said, during a brief speech at the National Institutes of Health headquarters in Bethesda, Md.

It’s “a plan that all Americans hopefully can rally around, and it should get bipartisan support, in my humble opinion. It should unite us, not continue to separate us,” he added.

The administration’s winter COVID plan, which comes as the omicron variant of the coronavirus sparks concerns, includes an expansion for at-home testing in the U.S. and tighter COVID testing timelines for travelers entering the country.

The U.S. is averaging more than 1,000 COVID deaths a day, and cases and hospitalizations are rising again, according to a New York Times tracker. New Hampshire, Michigan and Minnesota are leading the country in new cases measured on a per capita basis, the tracker shows.

The Centers for Disease Control and Prevention’s vaccine tracker, meanwhile, is showing that almost 198 million people living in the U.S. are fully vaccinated, equal to 59.6% of the overall population, one of the lower rates for a wealthy country.

The government is planning to again push unvaccinated people to get their shots and encourage all adults to get boosters, Biden said Thursday. Most of the recent cases, hospitalizations and deaths are in unvaccinated people, as they have been for months.

See: Confused about whether to get a COVID booster? Here’s what to know.

Germany, which is struggling to persuade its population to get vaccinated, has renewed its effort to get those people to get their shots, with Health Minister Jens Spahn warning Friday that 1% of Germany’s population is currently infected, ABC News reported.

The country recorded 74,352 new cases on Friday and 390 fatalities, according to data from the Robert Koch Institute.

Spahn said that the number of unvaccinated residents who are infected and seriously ill is much higher than their share of the overall population: “If all German adults were vaccinated, we wouldn’t be in this difficult situation,” he told reporters in Berlin.

In Norway, at least 17 cases of suspected omicron cases of COVID have been detected after a Christmas party in Oslo, AFP reported. Up to 120 people, all vaccinated, including one who had recently traveled to southern Africa, gathered for the party.

“So far 60 people have tested positive (for Covid) with PCR tests, and four with antigen tests,” the city of Oslo said in a statement.

Chinese media reported that China may ban spectators from one of the bigger venues at the Winter Olympics, if the coronavirus outbreak worsens, AFP reported.

In medical news, a study published in British journal The Lancet found that seven COVID-19 vaccines can produce an immune response when given as a booster. This is the first research to directly compare COVID-19 booster shots. The study involved 2,878 volunteers who had received two doses of the Pfizer-BioNTech or AstraZeneca
AZN,
-1.50%

AZN,
-0.86%
vaccines as their primary shots.

Latest tallies

The global tally for the coronavirus-borne illness climbed above 264.3 million on Friday, while the death toll edged above 5.23 million, according to data aggregated by Johns Hopkins University.

The U.S. continues to lead the world with a total of 48.8 million cases and 785,914 deaths. 

India is second by cases after the U.S. at 34.6 million and has suffered 470,115 deaths. Brazil has second highest death toll at 615,179 and 22.1 million cases.

In Europe, Russia has the most fatalities at 273,463 deaths, followed by the U.K. at 145,729.

China, where the virus was first discovered late in 2019, has had 111,515 confirmed cases and 4,809 deaths, according to its official numbers, which are widely held to be massively understated.

While the likes of Nvidia
NVDA,
-3.95%,
AMD
AMD,
-4.00%,
Intel
INTC,
-0.04%
and Qualcomm
QCOM,
-0.63%
are often among the first companies that come to mind for semiconductor investors, there are other players that have been growing, innovating and thriving amid the chip boom.

In a recent opinion piece, I pointed out four: Lattice Semiconductor
LSCC,
-1.90%,
Micron Technology
MU,
-0.40%,
Applied Materials
AMAT,
-0.20%
and Marvell Technology
MRVL,
+15.43%.
The first three have performed admirably this year, with returns between 12% (Micron Technology) to about 70% (Lattice Semiconductor and Applied Materials). Marvell, following its most recent quarterly results and subsequent share-price explosion, is on pace to perform better than all of them.

I firmly see Marvell Technology’s strategy, which ties it to rapidly expanding secular trends like 5G, connected vehicles and cloud, as an indicator of its growth prospects and runway for short- and longer-term growth.

Good execution leads to bright outlook

Thursday’s earnings report showed record revenue of $1.21 billion, up 61% year-over-year, cementing the company’s recent form as both consistent and encouraging, especially for Marvell investors.

Other noteworthy metrics for the quarter included 72% growth in earnings per share year over year, 109% growth for cloud and an exceptionally bullish outlook for its fourth quarter and fiscal 2023 periods. The company guidance is for 65% growth (at the midpoint), and more than 30% growth in its fiscal year ahead.

Marvell, based in Santa Clara, Calif., has now enjoyed six quarters of accelerated earnings and received several upgrades this year, including a notable revision from Citigroup.

Growth underpinned by the right bets

The numbers that Marvell has delivered over this robust period of growth is the byproduct of a slate of wise strategic decisions that have been made by Matt Murphy and his leadership team since coming on board. When Murphy took over the company 5 1/2 years ago, it was in a delicate state, to say it nicely. The company, which had its most significant bets on the consumer space, was dealing with increased competition, margin compression and a lack of differentiation.

The pivot to delivering valuable innovation that correlates with some of the world’s most in-demand markets began with the acquisition of Cavium. This pivot from consumer was high-risk, high-reward, but has proven to be a stroke of genius, and the entry/expansion into high-growth areas including datacenter, edge, cloud, 5G and automotive has made the company not only increasingly relevant but a key growth name in these industries with notable upside due to its attachment to these in-demand trends, which are all seeing expanding total addressable markets (TAMs).

Beyond the right technology bets, the company has also made a series of strong acquisitions to strengthen its network and datacenter capabilities. First was the notable and largest-ever acquisition for Marvell of Inphi at $10 billion. More recently, the company acquired Innovium, which is set to add $150 million to the company’s top line in 2023 but also added to its capabilities to deliver high-end ethernet switch ASICs, which instantaneously improved the company’s position with hyperscale cloud providers as well as a growing number of edge use cases.

Can’t-ignore company

With a current market value hovering at around $60 billion, Marvell is quietly on its way to mega-cap status, something that could happen over the next two to three years if it continues to execute at its current rate. Concurrently, chip demand is slated to stay high for at least the next few years. However, I don’t see secular trends in any of Marvell’s key segments reversing in the foreseeable future.

Add in the bullish guidance, calculated market selection and the strategic utilization of M&A, and we have what looks to be a winner in Marvell Technology. A company that bullish semiconductor investors simply cannot afford to ignore.

Daniel Newman is the principal analyst at Futurum Research, which provides or has provided research, analysis, advising, and/or consulting to Marvell, Qualcomm, Intel, Nvidia and dozens of other companies in the tech and digital industries. Neither he nor his firm holds any equity positions with any companies cited. Follow him on Twitter @danielnewmanUV.

The stock has now dropped 36% year to date, after nearly tripling (up 200%) in 2020. In comparison, the S&P 500 index
SPX,
-0.68%
has gained rallied 21% this year after climbing 16% last year.

The company’s report served as “a good reminder that even outstanding companies take their proverbial eye off the sales ball,” wrote Needham analyst Scott Berg in a note downgrading DocuSign’s stock to hold from buy. While DocuSign announced that it would be changing some elements of its sales organization, Berg said he has found that “fixing these sales issues often requires several quarters.”

Citi Research analyst Tyler Radke wrote that DocuSign delivered “one of the biggest SaaS [software-as-a-service] whiffs in recent memory with total billings growth of 28% significantly below [the] 34% guide” during the fiscal third quarter. DocuSign’s billings outlook for the fiscal fourth quarter was 22% at the midpoint, which came in significantly below the 32% consensus figure Radke cited in his note to clients.

“With a largely resilient performance vs [work-from-home] peers over the last two quarters, we are surprised that DOCU is seeing significant customer behavior/execution issues cropping up now, and in this magnitude,” he continued.

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Radke called the report a “thesis shifter,” though he kept his buy rating on the stock, arguing that DocuSign has a “first-mover advantage” in its domain and that there are “few signs” that people are shifting back to manual agreements. He cut his target price to $231 from $389.

Evercore ISI analyst Kirk Materne wrote that while DocuSign faced difficult comparisons in its most recent quarter, the company “simply misread the market in terms of demand and that led to a faster than expected deceleration in billings growth.”

But the stock’s sharp move downward indicates that “the damage is essentially done as it relates to the quarter,” he wrote. Further, after speaking with DocuSign’s management team, Materne believes that DocuSign’s fiscal fourth-quarter billing outlook “assumes no improvement in demand gen[eration] vs. 3Q, which could prove conservative.”

While he called the stock’s selloff “a bit overdone,” Materne admitted that “the reality is this stock just went from a story where investors were thinking about durable growth being in the 30%’s to being in the 20%’s and that’s going to create a pretty material de-rate.”

He cut his price target to $200 from $320, writing that “until DOCU can show that it can generate, not just fulfill, demand on a regular basis, the multiple is capped.” Materne kept an outperform rating on the stock, citing the long-term potential of e-signature technology especially in markets like government where DocuSign is “very early” in its penetration.

DocuSign shares are off roughly 52% from their September closing high of $310.05.

Corporate insiders confirm this view. They’ve stepped up buying considerably in the market weakness. What’s more they’re buying all the right groups – travel, retail, energy and materials, among others. These are the cyclical areas that’ll do the best as worries about growth recede, and insiders know it. I don’t see any hunkering down in defensive names like consumer staples.

There are lots of stock bargains because there’s been so much damage, even if narrower indexes like the S&P 500
SPX,
+0.46%
and the Dow Jones Industrial Average
DJIA,
+0.35%
have hung tough, propped up by a few large names. The Russell 2000 small-cap index
RUT,
+2.74%
is down more than 10%, and most stocks in the more widely followed indexes like the S&P 500 have also fallen more than 10% at some point recently.

I’ll single out 10 names favored by insiders, including several I’ve recently suggested in my stock advisory letter Brush Up on Stocks (the link is in my bio, below). But first, a quick look at why insiders, like me, don’t seem to be too worried about the twin fears.

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Omicron

The concern here is that this new variant is far more contagious and deadly than the delta variant.

The first fear may be true. Case counts are rising sharply in South Africa, which suggests it is more contagious. As for lethality, though, omicron seems to be mild so far. There is still a lot to learn, but this is the message we consistently get from doctors and health authorities with lots of experience with COVID.

“What we are seeing clinically in South Africa, and remember I’m at the epicenter of this where I’m practicing, is extremely mild for us,” says Angelique Coetzee, a doctor in South Africa who has three decades of experience. “These are mild cases. We haven’t admitted anyone. I’ve spoken to other colleagues of mine and they give the same picture.”

Hospitalizations in South Africa “are ticking up but not incredibly fast,” agrees William Hanage, an associate professor of epidemiology at Harvard and co-director of its Center for Communicable Disease Dynamics. U.S. health authorities confirm omicron may not be especially lethal. Both the Centers for Disease Control and Prevention and the Minnesota Department of Health describe the first cases found in the U.S. so far as mild.

if the omicron variant is mild, this wouldn’t be a surprise. Respiratory viruses naturally evolve to be more contagious and less lethal, notes Professor Karl Lauterbach, an epidemiologist in Germany. This makes sense from the point of view of a virus. A virus has a better chance if it spreads quickly and does not kill its host.

On vaccine “escape” or evasion, former Food and Drug Administration chief Scott Gottlieb thinks the current vaccines will work against omicron by suppressing symptoms enough to lower hospitalizations. “There’s a high degree of confidence that efficacy is going to be preserved,” he says. “Will it be the same 95%? Perhaps not, but you will still have a meaningful amount of efficacy.”

He notes the mRNA vaccine companies can tweak their vaccines to make them even better, in a matter of months. Vaccine companies like Pfizer
PFE,
-3.00%
confirm boosters will work, and that they’ll be able to customize them for the omicron variant. “In our view and reiterated by Pfizer, the current booster will likely be effective,” says Jefferies biotech analyst Michael Yee. “A new version for 2022 can be even better.”

Inflation

There’s are lots of reasons to think inflation fears are overblown. The worry here is that the Federal Reserve is “behind the curve” so it will have to hike rates aggressively, which might kill growth and the bull market. This isn’t going to happen. One sign is that commodity prices and shipping costs have been falling sharply. These are often the leading edge of inflation.

Next, take a moment to drill down on the current inflation spike. To do so, consider the Atlanta Federal Reserve’s breakdown of the parts of the Core CPI Index into “flexible” categories (quick to change) and “sticky” categories (slow to change). Right now, the flexible components account for most of the headline inflation.

These prices are up around 15% in the past year, compared to 3% gains for the “sticky” prices, points out economist Jim Paulsen, the market strategist at Leuthold Group. “While troublesome, the Core CPI Index’s overall rise is due almost entirely to prices that traditionally move around a lot, both up and down,” he says. This suggests the headline inflation rate can reverse and move down quickly from here.

That’s what a lot of analysts and bond market investors think. Analysts expect inflation of less than 2% over the next two to 10 years, according to projections tracked by the Atlanta Fed. Meanwhile, the 10-year inflation rate projected by investors in the bond market stands at around 2.6%, notes Paulsen. Not terribly alarming.

These projections make sense to me, because companies say their supply chain issues will be fixed by around the middle of next year. Shortages linked to supply chain issues have been a main contributor to price spikes.

Finally, mobility tracking data from Alphabet
GOOG,
+1.52%

GOOGL,
+1.36%,
Apple
AAPL,
-0.61%,
OpenTable and the Transportation Security Administration show that people in the U.S. have significantly curtailed how much they go out in public. On Nov. 30 and Dec. 1, TSA check-ins were 79%-81% of 2019 levels, compared to 85% to 90% in the prior 10 days, by my calculations. If this reduced mobility slows the economy a little, it will ease fears about inflation and the need for the Fed taking away the punch bowl too quickly.

Insiders

In a mini-replay of March-October of 2020 when the COVID crisis first raged, insiders have once again stepped up to buy market weakness caused by fresh COVID fears. True, insiders are not epidemiologists. But they are not dummies either. They have good networks of contacts and they see the tone of their businesses every day. Their buying is focused on all the right areas like cyclicals, retail, energy and industrials, not defensive names.

Companies where insiders have been buying meaningful amounts over the past several days include outdoor and retail names Six Flags Entertainment
SIX,
+4.84%,
American Eagle Outfitters
AEO,
+1.66%,
Nordstrom
JWN,
+2.65%
and American Woodmark
AMWD,
+4.60%
; travel names like Delta Air Lines
DAL,
+9.28%
and Playa Hotels & Resorts
PLYA,
+6.58%
; energy names like Exxon Mobil 
XOM,
+2.49%
and EOG Resources
EOG,
+1.42%
; and materials names like Cleveland-Cliffs
CLF,
+2.34%
and Orion Engineered Carbons
OEC,
+4.86%.

Ho, ho, ho!

Their buying confirms work by seasonality and trading expert Larry Williams who tells me his work concludes we can expect a “Santa Claus” rally once again, later this month. We’ll see, but since the two main fears are false fears that will till take a little time to more fully recede, this makes sense to me.

Michael Brush is a columnist for MarketWatch. At the time of publication, Brush owned GOOGL. Brush has suggested GOOGL, SIX, AMWD, DAL XOM, EOG and CLF in his stock newsletter, Brush Up on Stocks. Follow him on Twitter @mbrushstocks.