Crude, Tech, Jobs Highlight Short Holiday Week

Tech, Oil Drive Short Week; VIX Options Indicator Surges

Jul 7, 2017 at 2:29 PM
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After a relatively quiet first half of 2017 -- sending up a rare stock signal seen just one other time since 1929 -- U.S. stocks kicked off the second half with a volatile start, with the major market indexes taking their cues from oil prices, tech stocks, and the latest jobs data. The Dow Jones Industrial Average (DJIA) started the week with a record high in Monday's holiday-shortened session, and while the next two post-holiday trading days were a bit bumpy, the blue-chip barometer is set to end the week in the black. The Nasdaq Composite (COMP), on the other hand, sat out the rally to start the week, as tech stocks took a tumble, but a Friday rebound should help the index eke out a weekly win of its own. Meanwhile, the CBOE Volatility Index (VIX) -- or the stock market's "fear gauge" -- briefly topped its 200-day moving average, while this VIX options indicator hit a 10-year high.

Possible 'Dead-Cat Bounce' for Oil Prices?

Crude oil prices remained in focus, after sending up a signal that preceded the 2014 oil crash. Black gold notched an eighth straight daily win in Monday's session, marking its longest winning streak in seven years. However, the rebound seemed to be a dead-cat bounce, with oil prices resuming their sell-off after the July 4 holiday. Pressuring crude -- and, subsequently, many energy stocks -- were reports of rising Organization of the Petroleum Exporting Countries (OPEC) exports in June, though the Energy Information Administration (EIA) reported a larger-than-expected drop in domestic crude inventories.

Tech Stocks Remained in Focus

It was another hot-and-cold (or, rather, cold-and-hot) week for tech stocks, with a handful of big-cap names in the news. Microsoft confirmed recent rumors of mass layoffs, announcing on Thursday plans to cut up to 3,000 jobs. Apple, meanwhile, was hit with another round of patent-infringement allegations from Qualcomm, while Digital Ally stock skyrocketed on a patent victory against Axon. Elsewhere, Verizon was reportedly circling fellow Dow stock Disney as an M&A target, and this FAANG stock's pullback pointed to a potential buying opportunity. 

Traders Exhaled After Friday Jobs Report 

The holiday-delayed ADP report on private-sector payrolls missed expectations, pressuring the major stock indexes into the red on Thursday. In addition, weekly jobless claims came in higher than expected. The double dose of disappointing data made for an ominous session ahead of Friday's highly anticipated jobs report from the Labor Department. However, the June jobs report on Friday exceeded expectations, helping stocks bounce back.

Car Stocks, Auto Parts Manufacturers Made Headlines

Automakers and car-parts retailers also made headlines last week. While Ford and General Motors stocks got a lift from June auto sales data, electric vehicle maker Tesla Motors crashed. Specifically, Tesla stock tumbled into bear-market territory, plagued by delivery concerns and a lackluster safety rating for its Model S. Meanwhile, O'Reilly Automotive issued weaker-than-expected comparable-store sales figures for the second quarter, sending the shares deep into the red and sparking a massive sector swoon for auto parts stocks.

Yellen, Big Banks in the Spotlight Next Week 

Next week, Fed Chair Janet Yellen will be in the spotlight, as the central banker makes her rounds on Capitol Hill. Specifically, Yellen will give her semi-annual testimony in front of House and Senate finance committees on Tuesday and Wednesday. Meanwhile, blue chip JPMorgan Chase will kick off earnings season, with fellow big-cap banks Wells Fargo and Citigroup also set to report earnings at the end of next week. Looking out beyond next week, this casino stock could be ready to heat up, if past is prologue, while traders may want to take profits on this ETF.

 

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