Stocks Crushed By Facebook, China Drama

A potential trade war with China was the main story again

Mar 23, 2018 at 2:05 PM
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It was a rough week for the U.S. stock market, as worries about a trade war with China and a sharp decline in tech heavyweights -- namely Facebook (FB) -- pressured the major benchmarks to big weekly losses. In fact, the Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite (IXIC) at the time of this writing are set for their largest weekly declines in over a month. Of course, investors also digested an interest rate hike from the Fed, with the central bank giving the economy a vote of confidence in the process.

Trade War Fears Mount

While talk of a trade war has been hanging over Wall Street for weeks, the situation escalated after President Donald Trump announced $60 billion in tariffs on China Thursday. This news prompted a more than 700-point decline in the Dow.

Just a day later, China responded with trade measures of its own. In the meantime, traders punished U.S.-listed Chinese firms, including Alibaba stock, and put volume surged on the e-commerce giant as a result.

Facebook Drama Headlines Tech Sell-Off

But early in the trading week the focus was almost entirely on Facebook (FB). The social media stock experienced its worst day in years in light of the drama surrounding Cambridge Analytica and its misuse of the company's user data. Options traders took advantage of the opportunity, with put volume setting a record high.

Facebook's struggles spread throughout the entire tech sector, and that obviously includes fellow FAANG stocks and social media rivals, like Twitter and Snapchat parent Snap. Oracle (ORCL) suffered major post-earnings losses, as did Micron (MU), and OLED stock struggled, too, following surprising Apple (AAPL) buzz. Yet all those moves pale in comparison to this software stock that lost half its value.

It wasn't all negative headlines in the tech space, however. (CRM) made waves again with its big M&A announcement, and BlackBerry (BB) grabbed the spotlight with a blue-chip partnership. Elsewhere, Samsung news gave Roku (ROKU) a lift.

Healthcare Names to Watch

We again covered a number of noteworthy moves in the healthcare sector. Few names impressed more than Arcadia Biosciences (RKDA), though Omeros (OMER) came close. Arena Pharmaceuticals (ARNA) has also continued to be a winner in the space.

bluebird bio (BLUE) used to spend most its time in the winners' circle, but recently found itself on the end of a big-time losing streak. It was Proteostasis Therapeutics (PTI) that landed in the cross hairs of short sellers, though. Some of the higher profile names took their bumps, too, including Pfizer (PFE) and AbbVie (ABBV). Going forward, underperforming Celgene (CELG) may face more headwinds.

Other Winners This Week

Looking at some of the other stocks that were in focus this week, analysts kept raising the bar for Nike (NKE), and the stock rewarded bulls with an impressive earnings win on Friday. Analysts are also fans of Booking Holdings (BKNG), Ralph Lauren (RL), and NetApp (NTAP) -- which has also rewarded options traders. Pandora's (P) M&A efforts earned it a major price-target hike, and another brokerage firm is expecting new highs from this insurance giant.

Shortened Week Ahead

While markets will be closed next Friday for Good Friday, there's plenty on the economic calendar to pay attention to, including the final reading on fourth-quarter GDP. We also compiled a list of 50 stocks to trade next week, including this FAANG stock to avoid.


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