Trade Talk Fuels Wild Ride on Wall Street

Earnings reactions sparked volatile moves throughout the retail sector

Aug 31, 2018 at 1:30 PM
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The U.S. stock market started the week with a bang, as Wall Street cheered a trade deal between the U.S. and Mexico -- sparking major upside for these auto stocks, though Tesla sat out the rally on an Elon Musk tweet. Surging tech shares only fanned the bullish flames, with the S&P 500 and Nasdaq carving out new record highs -- with the latter slicing through the round 8,000 mark for the first time ever. The positive momentum hit a roadblock late Thursday, though, on reports President Donald Trump is preparing to go ahead with a new round of Chinese tariffs. Nevertheless, all three major indexes are pacing toward impressive August gains.

Apple Stock Eyes Best Month Since This Bull Market Began

Netflix (NFLX) extended its impressive bounce on news of an Apple app store workaround. The reports didn't shake Apple (AAPL), though, which hit a new all-time peak after the company set its September event date -- where a lineup of new iPhones is expected to be announced. What's more, AAPL stock is set for its biggest monthly gain since April 2008, just after that year's bear-market bottom, up 20% at last check.

Amazon (AMZN) also notched a new record high, and closed in on the $1 trillion market cap. And while Facebook (FB) could extend its recent rebound into next week, Alphabet (GOOGL) has been the best FAANG stock to own in September over the last 10 years.

Weed Stocks Stay in the Spotlight

Weed stocks had another volatile week. Tilray (TLRY) stock is pacing for a 150% August return -- thanks in part to Tuesday's blowout earnings report -- sparking heavy options trading. Cronos Group (CRON), on the other hand, is headed toward a 10% weekly loss, following a scathing note from Citron Research.

American Eagle, Lululemon Volatile After Earnings

Retail earnings continued to pour in. While options bears blasted American Eagle Outfitters (AEO) ahead of earnings, the stock's sharp sell-off after the event may have created a buying opportunity. Big Lots (BIG) is making another volatile post-earnings move, last seen down 9% on a second-quarter miss and weak forecast.

Lululemon (LULU), on the other hand, hit a record high after a brow-raising surge in same-store sales -- sparking a fresh wave of bullish brokerage notes. Another post-earnings winner was DSW (DSW), while RH (RH) shares are trading near record highs ahead of the retailer's earnings report, due after the close this Tuesday, Sept. 4.

Big Week for FDA Decisions

AbbVie (ABBV) ran into familiar resistance after the Food and Drug Administration (FDA) approved an Imbruvica combination treatment, while a regulatory nod lifted this EpiPen rival. On the flip side, Ionis Pharmaceuticals (IONS) and Akcea Therapeutics (AKCA) spiraled after a disappointing FDA decision. Elsewhere in the sector, this German drug stock tripled on a key partnership, and this penny stock popped on a fresh "buy" rating.

Stocks to Buy and Sell Right Now

Among specific buying and selling opportunities in the stock market right now, Schaeffer's Senior Quantitative Analyst Rocky White compiled a list of the best and worst stocks to own after Labor Day. Widening the scope, this retail stock is one of the best S&P stocks to own next month, alongside this pair of airline names and the broader leisure sector. It could be time to short these stocks, though, if history is any guide.

Elsewhere, potential buy signals are flashing for Marvell Technology (MRVL) and Arista Networks (ANET), though it could be time to pick up puts on this embattled pizza chain. And while analysts set impressive price targets on PayPal (PYPL) and Square (SQ), Benchmark said it's selling this Wall Street newcomer.

Jobs Data, Fed Speeches on Tap Next Week

Looking ahead, markets will be closed on Monday for Labor Day -- but there's no shortage of action the rest of the week. In addition to an onslaught of jobs data, several Fed officials are set to speak, which will likely attract the eye of gold contrarians. And while signs suggest this rally could continue throughout September, Schaeffer's Senior V.P. of Research Todd Salamone warned one risk to the stock market is the extreme short position on VIX futures.


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