Weekly Wrap-Up: Tech Stocks Shine, Trump Blasts Drug Stocks

A strong showing by FANG stocks has the Nasdaq Composite (COMP) set for a weekly win, while Donald Trump's comments on drug pricing pressured shares of drug companies

Jan 13, 2017 at 1:13 PM
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The Dow has continued to dance around the psychologically important 20,000 mark this week, but it was the Nasdaq Composite (COMP) that stole the spotlight. Specifically, the tech-heavy benchmark carved out a series of new highs -- as did its under-the-radar counterpart, the Nasdaq-100 Index (NDX) -- helped by a surge in so-called "FANG" stocks. Facebook Inc (FB), for instance, is on track for a 4.5% weekly advance, boosted by a round of bullish brokerage notes. And while shares of Netflix, Inc. (NASDAQ:NFLX) failed to capitalize on rumors it's a potential target for a Facebook takeover, the stock swung into positive week-to-date territory today on some upbeat analyst attention. Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOGL) also saw their fair shares of positive price action, up 3% and 1% week-to-date, respectively.

Meanwhile, Wednesday's Trump-related crash in biotechs -- which had started the week strong -- briefly stalled the COMP's uptrend, with the iShares NASDAQ Biotechnology Index ETF (IBB) sinking after the president-elect said drug companies are "getting away with murder." The healthcare-heavy exchange-traded fund (ETF) is set to close out the week with a modest gain, however, the mid-week pullback has some of IBB's biggest holdings hovering near critical technical levels, including Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and Biogen Inc (NASDAQ:BIIB).

Trump's press conference also fueled big moves for the Mexican peso, as well as the iShares MSCI Mexico Capped ETF (EWW) -- both of which have struggled since the U.S. presidential election -- after the president-elect reiterated his support for imposing large import tariffs. In fact, Trump's Twitter feed shined the spotlight on automakers Fiat Chrysler Automobiles NV (NYSE:FCAU) and Ford Motor Company (NYSE:F) early in the week, praising both companies for increasing domestic investment. FCAU couldn't maintain this Trump-inspired momentum, however, and came crashing back down to earth on Thursday, after the Environmental Protection Agency (EPA) pointed an accusatory finger at the automaker.

Elsewhere on Wall Street, fourth-quarter earnings season kicked off -- although aluminum giant Alcoa Corporation (NYSE:AA) broke a long-standing tradition of being the first firm to report, following its split last fall. As such, big banks took center stage -- and are key events to watch, according to Schaeffer's Senior Equity Analyst Joe Bell, CMT --  a trend that will accelerate in next week's trading. This week, JPMorgan Chase & Co. (NYSE:JPM) has emerged as the one to beat, and could have room to run, although bank stocks Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC) are trading higher after an initial negative reaction to their respective companies' results.

Looking ahead, traders will be eager to see if the Trump rally will continue through next Friday's inauguration, when Donald Trump will be sworn in as the 45th president of the U.S. While investor optimism continues to hover around extreme levels -- although this indicator suggests we're not quite at the euphoria stage of the sentiment cycle -- the Dow's repeated failure of the round 20,000 mark could translate into near-term trouble for stocks. Nevertheless, most major U.S. benchmarks are trading higher this afternoon, with the COMP on track for a big weekly gain. The S&P 500 Index (SPX) and Dow, meanwhile, are on pace to log weekly losses.

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