Trump Boosts Bank Stocks as Apple Earnings Impress

A busy week of earnings from tech heavyweights Apple, Facebook, and Amazon shared the limelight with several executive orders from the White House

Feb 3, 2017 at 1:45 PM
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President Donald Trump's immigration ban sparked a broad-market sell-off on Monday and Tuesday -- with the Dow surrendering its short-term foothold atop 20,000, and the CBOE Market Volatility Index (VIX) spiking -- a move that may have been predicted by VIX's "overextended" cousin. Nevertheless, the major stock market benchmarks managed to hold on to strong monthly gains, with the Nasdaq Composite (COMP) closing January up an impressive 4.3%. According to the so-called January Barometer, this could signal additional gains for the rest of the year. And while February started off on a positive note, the second month of the year is historically a bearish one to trade -- with these 10 best stocks and 10 worst stocks among the specific names to watch.

Trump's Twitter account only stoked geopolitical concerns as the week wore on, but Wall Street was quick to turn its attention to a fresh round of corporate earnings reports and the Fed's latest policy decision ahead of today's big nonfarm payrolls report. Specifically, tech stocks were in focus amid a slew of quarterly results, with Fitbit Inc's (NYSE:FIT) preliminary numbers sending the shares to an all-time low. Elsewhere, Apple Inc.'s (NASDAQ:AAPL) results blew past estimates -- which boosted the stock to a new annual high, and sparked this rare bullish signal in the equity's options pits.

And while Facebook Inc's (NASDAQ:FB) numbers initially impressed -- with the shares notching a record high -- the stock couldn't follow through, eventually slumping and pulling the Nasdaq with it. Though the tech-heavy index is brushing off Amazon.com, Inc.'s (NASDAQ:AMZN) post-earnings slump today -- with AMZN shares retreating from the near-record-high territory they've been lingering in of late -- it is on track to log a weekly loss.

Meanwhile, on the economic front, the Federal Reserve -- as expected -- chose to stand pat on its current monetary policy at its first meeting of 2017, and gave little clues as to when it could be ready to raise interest rates again. This announcement occurred in step with a week's worth of solid jobs data, culminating in this morning's standout nonfarm payrolls report for January, which -- along with a positive earnings reaction for Visa Inc (NYSE:V) -- helped send the Dow up triple-digits.

A big end-of-week rally in bank stocks is also helping the Dow pare its week-to-date deficit -- and climb back above 20K -- on reports Trump will sign an executive order easing regulations set forth in the 2010 Dodd-Frank Act on financial reforms, and plans to roll back former President Barack Obama's "fiduciary rule." Despite these gains, the financial sector faces stiff historical headwinds this month, unlike retail stocks, oil stocks, and gold shares -- all of which tend to outperform in February, and the latter of which could present a prime contrarian play at the moment, especially given this week's strong price action.

Looking ahead, earnings season continues to roll on next week, and social media stocks will again demand the lion's share of attention. On Thursday, Twitter Inc. (NYSE:TWTR) will unveil its results ahead of the open -- with options traders optimistic ahead of the event -- while Yelp Inc (NYSE:YELP) will report after the close. A positive earnings reaction for YELP could spark a short-squeeze for the outperformer, while these two uptrending media stocks also seem ripe for a round of short covering.

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