GE's Collapse and Oil's Slide Drag Dow to Another Weekly Decline

Tesla unveiled its electric semi, while Home Depot and Wal-Mart delivered earnings

Nov 17, 2017 at 3:49 PM
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It was an up-and-down week for U.S. stocks, but as of this writing the Nasdaq Composite (IXIC) is well on its way for a weekly win, with the S&P 500 Index (SPX) flirting with breakeven and the Dow Jones Industrial Average (DJIA) destined for a second straight weekly loss. The Dow can direct part of the blame for its weakness on oil prices, which fell sharply mid-week due to a concerning outlook for oil demand from the International Energy Agency (IEA) and another weekly increase in U.S. supplies. Despite stabilizing towards the end of the week, crude futures closed lower for the first time in six weeks.

The other big focus was Republicans' push for an overhaul to the tax system, with the House of Representatives on Thursday passing its version of the tax plan -- helping the Nasdaq notch a record close. The issue will likely continue making headlines going forward, after Treasury Secretary Steve Mnuchin said he expects President Trump to have a tax bill to sign before Christmas.

Blue-Chip Stocks Make Big Moves

The Dow was also rattled at the start of the week by a historic sell-off in General Electric (GE) stock, after the company announced it was cutting its dividend in half. The two-day plummet overshadowed another impressive earnings release from Dow component Home Depot (HD) -- but luckily for the blue-chip index, the home improvement retailer would not be the last to report strong earnings. Later in the week, Wal-Mart stock exploded after the company's impressive quarterly report, as did Cisco Systems (CSCO). Nike (NKE) also outperformed on Friday, ahead of a historically bullish week for the shares.

Retail Earnings Dominate the Week

In addition to HD and WMT, there was a long list of retail stocks making waves throughout the week. Target (TGT) set a downbeat tone early on with its disappointing holiday-quarter forecast, but the week would get much better for the sector going forward. Not long after TGT's drop, home furnishings retailer RH exploded higher on an upbeat forecast, and by Friday was joined in the winners' circle by Foot Locker (FL), Abercrombie & Fitch (ANF), and Gap (GPS).

If history is any indicator, this group could stay in the limelight, especially with Black Friday coming up. For example, Urban Outfitters (URBN) reports earnings after the close Monday, and these two retail stocks historically outperform during Thanksgiving week. Yet, while some options traders are taking a defensive route on the sector, bulls could always just buy Amazon stock.

Healthcare Stocks Again Make Headlines

One group that seems to always make waves is healthcare stocks, and this week was no different. Arguably the biggest news came from Sangamo Therapeutics (SGMO), after the company said it had edited DNA cells in a patient with Hunter syndrome. Nektar Therapeutics stock rallied on a big announcement of its own, while Zymeworks (ZYME) got a boost from its partnership with Johnson & Johnson (JNJ). On the flip side, Diplomat Pharmacy (DPLO) got destroyed on Friday after its latest acquisition, and brokerage firm Jefferies lowered its outlook on drug juggernaut Bristol-Myers Squibb (BMY). Rounding out the losers is Teva Pharmaceutical Industries (TEVA), which got hit with bear notes not once, but twice this week.

Other Stocks in Focus this Week

Other noteworthy names this week included Tesla (TSLA), Snapchat parent Snap (SNAP), Roku (ROKU), and Applied Materials (AMAT). Starting with TSLA stock, the shares got a lift on Friday thanks to the unveiling of the company's electric semi trucks -- which quickly drew attention from J.B. Hunt. SNAP, meanwhile, went south after getting ditched by a notable hedge fund, while ROKU shares continue to rally to new highs. AMAT stock also surged, thanks to a strong earnings report. 

Stock Market Could Stay Busy During Turkey Week

Despite the abbreviated holiday trading schedule next week, there should be plenty of developments for traders to digest across Wall Street. For example, history suggests these semiconductor stocks could rally -- though they're just part of a larger list of stocks to own for the week. Elsewhere, gold bugs have been active ahead of next week's Fed meeting, and data suggests the dollar could rally. And while the CBOE Volatility Index (VIX) popped this past week, one sentiment indicator says we still haven't reached a market top.


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