Trade, Jobs in Focus as Q3 Kicks Off

Upbeat data on Biogen's Alzheimer's drug lifted several pharma stocks

Jul 6, 2018 at 3:05 PM
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Trade and jobs were the themes of this holiday-shortened week on Wall Street. Reports that the Trump administration is considering a bill that would allow the White House unilateral power to increase tariffs initially weighed on stocks to start the week. However, rumors of a possible U.S.-European Union (EU) tariff truce lifted stocks after the Fourth of July holiday, helping the major benchmarks shrug off a warning on trade from the Fed. Meanwhile, the highly anticipated June jobs report came in stronger than expected on Friday, helping to overshadow the implementation of "tit-for-tat" tariffs between the U.S. and China.

Against this backdrop, the Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite (IXIC) are eyeing weekly gains, while the Cboe Volatility Index (VIX) -- or Wall Street's "fear gauge" -- is on pace for its worst week in months. 

Analysts Weigh In on Chip, FAANG Stocks

Shares of Micron Technology (MU) stumbled in Tuesday's shortened session, as traders reacted to news that China temporarily banned sales of certain Micron chips. However, Stifel Nicolaus said the MU pullback "may prove to be a buying opportunity." Elsewhere, weekly call traders pounced on fellow chipmaker Advanced Micro Devices (AMD), while this tech stock sent up a historic "sell" signal.

On the FAANG front, several stocks received analyst love. Facebook (FB) stock scored an ambitious price target from BTIG, which also maintained a "buy" rating. Loop Capital hiked its price target on Apple (AAPL) stock to $210 -- in uncharted territory. Likewise, Cowen and Company expects a strong second quarter for Netflix (NFLX), lifting its price target to $430.

Car Stocks In Focus Amid Tariff Buzz

Automakers were in the spotlight this week, amid the aforementioned rumors of a potential tariff truce between the U.S. and EU. Meanwhile, Ford Motor (F) reported dwindling first-half sales in China. Electric vehicle maker Tesla (TSLA) was also in focus, after the firm issued an update on Model 3 production. CEO Elon Musk also took to Twitter to combat recent rumors that the company pulled brake tests to meet production goals.

Biogen Drug Data Boosts Pharma Stocks

The big story in healthcare this week was Biogen's (BIIB) Alzheimer's drug, which succeeded in a key mid-stage study. The news provided a halo lift to several other drugmakers, including AC Immune (ACIU). Elsewhere, analysts at Maxim believe the shares of EpiPen maker Adamis Pharmaceuticals (ADMP) could triple, while Arbutus Biopharma (ABUS) stock retreated from new highs after an analyst downgrade

3 Healthcare Stocks for Q3: Plus, Why Volatility Could Pop

Healthcare also topped our list of the best stocks to own in the third quarter, historically. Drugmaker Vertex Pharmaceuticals (VRTX) has generated the biggest average third-quarter gain of all S&P 500 stocks. Artificial heart valve maker Edwards Lifesciences (EW) is a close second, averaging a quarterly gain of 13.8% over the past 10 years. And bulls may not want to overlook Align Technology (ALGN) stock, either.

Outside of healthcare, this pair of retail stocks could be ready to rally. And with the third quarter officially underway, Schaeffer's Senior Quantitative Analyst Rocky White explained why stock volatility could surge in the second half. In the shorter term, big banks will kick off second-quarter earnings season next week, with JPMorgan Chase (JPM), Citigroup (C), PNC Financial (PNC), and Wells Fargo (WFC) set to report.

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