Upbeat earnings have the Dow and its index peers on pace for a big weekly win
Stocks began the week with a bang, with Wall Street cheering expected results from the
French presidential election, resulting in a widespread
relief rally. The
Nasdaq Composite (COMP) jumped to fresh record highs, but that was just the beginning, with the tech-heavy index toppling the
6,000 mark for the first time ever on Tuesday -- an accomplishment that shouldn't scare
stock pickers -- and notching five consecutive all-time intraday peaks. The
Dow wasn't left behind, though, with the blue-chip index rattling off its
best two-day stretch since November. Yet, even with the CBOE Volatility Index (
VIX) suffering a 25% single-day drop for just the fourth time ever, the risk still exists for a
volatility pop.
Trump Tax Talk Turns Sour
Another major storyline was the Trump administration's tax reform efforts. While this initially acted as a tailwind for stocks, excitement quickly turned to disappointment, as the president's tax reform proposals lacked the details investors were hoping for, even after Treasury Secretary Steven Mnuchin promised the "largest tax reform in the history of our country." Yet, although the slowest gross domestic product (GDP) reading in three years put additional pressure on stocks, the Dow, COMP, and S&P 500 Index (SPX) are well on their way for big weekly wins -- wrapping up a historically significant end to Trump's first 100 days in office.
Amazon, Alphabet Headline Tech Rally
Make no mistake about it, though, tech stocks were the main focus this week, with heavyweights Amazon and Alphabet Inc (NASDAQ:GOOGL) both surging to record highs after earnings. Meanwhile, our CEO Bernie Schaeffer believes record highs are "eminently achievable" for this semiconductor ETF, and options traders are loading up on Micron Technology, Inc. (NASDAQ:MU) call options. On the other hand, QUALCOMM, Inc. (NASDAQ:QCOM) met some late-week turbulence on Apple Inc. (NASDAQ:AAPL) woes. Telecom stocks were also in focus with net neutrality in the news once again. Tech isn't the only hot sector, however, evidenced by the outsized gains from casino stocks.
Caterpillar's Huge Week Highlights Earnings Winners
Looking closer at this week's earnings results, few stocks benefited more than Dow component Caterpillar Inc. (NYSE:CAT), which surged to fresh highs after toppling expectations. Fellow blue chip 3M Co (NYSE:MMM) followed suit with impressive earnings of its own, while oil stocks Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) both delivered well-received results. Twitter Inc (NYSE:TWTR), Under Armour, Paypal Holdings Inc (NASDAQ:PYPL), iRobot Corporation (NASDAQ:IRBT), and Hasbro, Inc. (NASDAQ:HAS) were also among the earnings winners.
U.S. Steel Stock Sells Off After Earnings
On the flip side, one of the week's biggest post-earnings sell-offs belonged to U.S. Steel Corporation (NYSE:X), with a possible delta-hedging situation adding to the stock's woes. Still, sector peer AK Steel Holding Corporation (NYSE:AKS) was able to bounce back from disappointing earnings, while mining stocks took focus later in the week, highlighted by Freeport-McMoRan Inc's (NYSE:FCX) results. Elsewhere, cloud stocks Synchronoss Technologies, Inc. (NASDAQ:SNCR) and Akamai Technologies, Inc. (NASDAQ:AKAM) both sank after reporting earnings, and GoPro's Inc (NASDAQ:GPRO) post-earnings slide rewarded bears. Also suffering notable losses after earnings were Schlumberger Limited (NYSE:SLB) and Express Scripts Holding Company (NASDAQ:ESRX).
Apple, Facebook Earnings Keep Focus on Tech Sector
Tech stocks should remain in focus next week, with Facebook Inc (NASDAQ:FB) and Apple both scheduled to report earnings. Traders will also be looking forward to the end-of-week release of the nonfarm payrolls report for April, as well as the two-day Fed meeting. With May set to begin, bullish options traders may want to take a hard look at the healthcare sector, especially these two high-profile drug stocks. Conversely, there are plenty of stocks for put buyers to target, as well.