Dow Posts Record Streak with Fed Minutes in Focus

Retail and Restaurant stocks highlighted another busy week of earnings, while the Dow hit a 30-year milestone

Feb 24, 2017 at 4:26 PM
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While the trading week was shortened due to the President's Day holiday, Tuesday began on a high note, with the Dow Jones Industrial Average (DJIA) popping out of the gate, and securing its eighth straight all-time-high close thanks to upbeat earnings from blue chips Wal-Mart Stores Inc (NYSE:WMT) and Home Depot Inc (NYSE:HD). Wednesday's session was highlighted by the release of minutes from the most recent Federal Open Market Committee (FOMC) meeting, with "many" Fed officials showing support for an interest rate hike "fairly soon." The day ended at yet another record closing high, marking the longest such streak since 1987.

Extending the streak to 10 on Thursday, the Dow notched a milestone seen only once before in history, though the tech-heavy Nasdaq Composite (COMP) ended lower. While it looked like the broader market was ready to take a breather today amid lower oil prices and sliding bank stocks, the Dow snuck out an 11th straight record close in the final minutes.

Restaurants, Retailers Highlight Earnings Slate

The earnings calendar remained busy this week. Several restaurant stocks were on the docket, and quarterly results sent Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) and Texas Roadhouse Inc (NASDAQ:TXRH) moving sharply in opposite directions despite downbeat analyst attention on both. Retailers were also in the earnings spotlight after Wal-mart kicked off the week's reports and options traders were busy placing bets. J C Penney Company Inc (NYSE:JCP) slid following its report, after announcing it will close at least 130 stores. But while options bulls may be waiting for more earnings inspired-tailwinds next week, buyers of SPDR S&P Retail ETF (XRT) could get burned.

Analysts Weigh In on Tech Stocks

In tech news, Verizon Communications Inc. (NYSE:VZ) agreed to a $350 million price reduction for its purchase of Yahoo! Inc.'s (NASDAQ:YHOO) core internet business. Apple Inc. (NASDAQ:AAPL) also found its fair share of attention this week. Analysts weighed in with price-target hikes, but the shares could be in trouble after a video of an iPhone 7 Plus apparently exploding went viral. Chipmaker NVIDIA Corporation (NASDAQ:NVDA) was also in the spotlight, with analysts slamming the stock, citing a slowdown in the gaming industry. But for contrarians, this still looks like a prime time to pick up NVDA calls.

Plenty of Opportunities for Bargain-Hunting Options Buyers

Meanwhile, these three bank stocks appear to be prime targets for bearish options buyers -- perhaps more so after Goldman Sachs Group Inc (NYSE:GS) slid on an analyst downgrade. A pair of real estate stocks has been offering near-term options on the cheap. Two outperforming steel stocks look attractive, too -- as both are long overdue for analyst love -- and a bullish signal flashed on First Majestic Silver Corp (NYSE:AG). Plus, we took a look at a stock replacement strategy for investors looking to limit risk with stocks panning record highs.

Is a Volatility Spike Ahead?

Volatility concerns were in focus this week, with Schaeffer's Senior V.P. of Research Todd Salamone discussing why the scales keep tipping toward a CBOE Volatility Index (VIX) spike -- plus a weekly trendline we're watching for support on an S&P 500 Index (SPX) pullback. Schaeffer's founder and CEO Bernie Schaeffer also weighed in today, examining whether we may be near a volatility inflexion point. Plus, with stock correlations dropping sharply, Schaeffer's Senior Quantitative Analyst Rocky White argued that it may be time to give up the passive investment strategy.

All Eyes on Trump, Yellen Next Week

On Tuesday, President Trump is due to speak in front of Congress, and many hope he will clear up tax and trade policies he has been alluding to for weeks. The preliminary reading on fourth-quarter gross domestic product (GDP) will also be released Tuesday, perhaps giving clues as to whether a rate hike will be on the table at next month's Fed meeting. The central bank will remain in focus through week's end, with Fed Chair Janet Yellen due to speak on Friday.

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