Nasdaq Lags as Social Media Stocks Sell Off

Facebook's post-earnings market cap loss was the worst in Wall Street history

Managing Editor
Jul 27, 2018 at 2:38 PM
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It was an exciting week on Wall Street, filled with plenty market-moving headlines. While market trajectory was once again defined by earnings season, the week kicked off with another Twitter tirade from President Trump, who took aim at Amazon this time. Blue-chip names powered a subsequent rally, and markets got a mid-week boost from trade developments between the U.S. and European Union (EU). FAANG name Facebook (FB) raised eyebrows with its earnings report, causing the Nasdaq Composite (IXIC) to pull back from its early week record high. The Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) are both on track for their fourth straight weekly wins, the former's longest streak since January. It appears the tech losses will be too much to overcome for the Nasdaq, though, sending it into the red for the week.

Blue Chip, FAANG Earnings Galore

Nearly one-third of the Dow components reported earnings this week. 3M (MMM), United Technologies (UTX), Verizon (VZ), Boeing (BA) kicked off the week with their earnings reports, while Coca-Cola (KO), Intel (INTC), Exxon Mobil (XOM), and Chevron (CVX) reported toward the end. And while it didn't report earnings, Walmart (WMT) received another bear note, and Caterpillar (CAT) got a boost from the Trump administration's planned $12 million stimulus to farmers.

Turning to FAANG stocks, Facebook's aforementioned earnings report sent the stock to its worst day ever. Google parent Alphabet (GOOGL), on the other hand, posted strong quarterly figures, although options traders appear to be bracing for a pullback. Elsewhere, Apple got a rather tepid price target ahead of its own earnings report, and Amazon.com (AMZN) shook off Trump's Twitter call-out.  

Chip Stocks See Newfound Strength

Several tech names were in focus this week as well. Online business service Yext (YEXT) toasted a partnership with Amazon.com, causing options volume to pop. Online payments processor Square (SQ) remained red-hot on its way to fresh record highs before its earnings report next week. Streaming stock Roku (ROKU) was once again compared to Netflix by analysts, while Western Digital (WDC) was dinged by soft guidance and bear notes.

Some other big gainers this week include Crocs (CROX) and video-game maker Activision Blizzard (ATVI), both of which got some much-deserved analyst love. On the flip side, Twitter (TWTR) careened lower at the end of the week, after a Facebook style post-earnings trip to the woodshed for the social media name.

Chip stocks were also in headlines. Advanced Micro Devices (AMD) was the big winner this week after its excellent quarterly report, although some options traders braced for a quick retreat in the semiconductor sector. Light developer Cree (CREE) is ripe for a short squeeze, while Nvidia's (NVDA) latest pullback could be a prime buying opportunity

Drug Stocks Offer Intriguing 'Buy' Opportunities

Several healthcare names made outsized moves this week. Insurance stock Centene (CNC) flirted with record highs prior to its earnings report. Shares of Biogen (BIIB) experienced the full gamut of reactions this week, gapping higher after a beat-and-raise, then promptly pulling back after subpar Alzheimer's drug data. Red-hot Immunomedics (IMMU) pulled back to a bullish trendline, while these two healthcare stocks received ambitious price targets. 

Elsewhere, biotech names Array Biopharma (ARRY) and Immunogen (IMGN) have struggled recently, but now could be the time to buy the dip. Gilead Sciences' (GILD) CEO announced his resignation, and heart monitor specialist BioTelementary (BEAT) turned in an impressive earnings beat. But perhaps the biggest loser of them all was Nabriva Therapeutics (NBRV) stock, which fell to a new record low after a discounted share offering.

Auto Stocks Sink

Auto stocks generated headlines this week, for all the wrong reasons. General Motors (GM) stock sunk after tariffs dug into the bottom line. The lowered outlook weighed on sector peer Ford Motor (F), which sent the shares to their lowest close since 2012, and the sell-off deepened after the automaker's own earnings release. Beleaguered Tesla (TSLA) stock extended its skid as well, after reports of the electric car maker asking for refunds surfaced earlier in the week, and another famed short seller took aim at the company.

Apple Earnings On Tap; 10 Stocks For Bulls

Earnings season will keep chugging along next week with Apple set to report, but there will also be a Fed meeting and jobs data for traders to digest. Amidst this busy earnings season, don't forget to check out these 10 stocks that are ripe for contrarian trades at the moment. 

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