Turkey Crisis Jolts Wall Street Awake

Tesla also made headlines -- and caught the attention of the SEC -- this week

Aug 10, 2018 at 2:51 PM
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The stock market was relatively quiet most of the week -- until a currency crisis on Friday shook traders out of their collective slumber. Prior to the crash of Turkey's lira -- which was exacerbated by President Donald Trump's tariffs -- Wall Street spent most of the week digesting the latest round of corporate earnings and a Tesla tweet heard 'round the world. In fact, the Nasdaq on Thursday notched its longest winning streak of 2018, and the the stock market's "fear index" fell to its lowest point since January ... just after sending up a big red flag for bulls.

Disney Earnings, Intel Downgrades Headline Blue-Chip News

Walt Disney (DIS) stepped up to the earnings plate mid-week, and shareholders were apparently not impressed. The media titan's quarterly report was not well-received, and the stock's subsequent decline weighed on the Dow -- much to the delight of recent Disney options traders.

It was also a rough week for Intel (INTC). The security snapped a five-day winning streak on Monday, after Barclays downgraded the shares to "equal weight" from "overweight," citing competition from Advanced Micro Devices (AMD). It was deja vu on Friday, too, after Goldman Sachs downgraded INTC stock to "sell" while upping its rating on AMD stock. Elsewhere, fellow chip stocks Applied Materials (AMAT) and ON Semiconductor (ON) took a hit after Morgan Stanley downgraded the U.S. semiconductor sector.

Snap, Dropbox Make Noise After Earnings

Aside from Disney, several other notable names reacted to earnings this week. Tyson Foods (TSN) and Warren Buffett's Berkshire Hathaway (BRKA) were among the notable winners, and social media stock Yelp (YELP) squeezed shorts after an earnings beat. Apple supplier Universal Display (OLED) also enjoyed a post-earnings rally, as did streaming service provider Roku (ROKU).

Shares of Snapchat parent Snap (SNAP), on the other hand, dropped along with the company's daily active users (DAU) count -- and some options traders placed well-timed bets. Pre-earnings puts were also popular on Dropbox (DBX) stock, and some analysts think the subsequent pullback is a "gift." Meanwhile, Hostess Brands (TWNK) stock was slammed on an earnings miss.

Tesla Tweet Heard 'Round the World

After last week enjoying its best day in years after earnings, Tesla (TSLA) once again made headlines this week, with CEO Elon Musk tweeting that he's considering taking the company private. After initially skyrocketing on the news, TSLA shares pulled back after the Securities and Exchange Commission (SEC) raised questions about the tweet. Meanwhile, rumors of a Tesla partnership bolstered this penny stock to its best session in months, and Musk's tweet sparked going-private speculation for this biotech stock.

Other auto stocks also caught our attention this week, particularly after China levied a 25% retaliatory tariff on $16 billion of U.S. goods -- most notably on crude oil and cars. Against this backdrop, and amid widespread optimism, General Motors (GM) and LKQ Corporation (LKQ) stocks look vulnerable to downgrades. Likewise, this auto stock just flashed a "sell" signal.

Hot Week for Healthcare Stocks

The Health Care Select Sector SPDR ETF (XLV) enjoyed an eight-day winning streak, as several healthcare stocks made noise. Array Biopharma (ARRY) was given a Breakthrough Therapy Designation from the Food and Drug Administration (FDA), and bulls blitzed this weed stock on key cannabis trial approval in Canada. Meanwhile, Wright Medical (WMGI) stock burned short sellers, and a partnership bolstered bluebird bio (BLUE).

After an initial dip after earnings, Vital Therapies (VTL) stock jumped back to two-year highs -- and William Blair analysts think the penny stock could quadruple. In the same vein, analysts see 50% upside for this pair of healthcare stocks, and SAGE Therapeutics (SAGE) scored some bullish analyst attention ahead of earnings. However, it wasn't all sunshine and rainbows; Gemphire Therapeutics (GEMP), for instance, got destroyed after an FDA request for more safety data on its cholesterol drug.

10 Best Stocks for Contrarian Traders

Among specific buying opportunities right now, Schaeffer's Senior Quantitative Analyst Rocky White compiled a list of the 10 best stocks for contrarian traders. In the underloved personal goods sector, blue chip Nike (NKE) looks like it has room to run. In addition, luxury apparel concern Ralph Lauren (RL) could have more gas in the tank. Outside of retail, a "buy" signal is flashing for Chipotle (CMG), despite a recent foodborne illness scare.

Walmart Headlines a Round of Retail Earnings Next Week

Looking ahead, blue chips Home Depot (HD) and Cisco Systems (CSCO) will report earnings next week. In addition, fellow Dow stock Walmart (WMT) will headline a busy week of retail news. Along with monthly retail sales data, Wall Street will digest quarterly reports from Macy's (M), J C Penney (JCP), Nordstrom (JWN), and others. In addition, Nvidia (NVDA), Cree (CREE), and Canadian Solar (CSIQ) earnings will be released.


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