Stocks Decline as Tech, Tesla Get Lit Up

Trade uncertainty was again a headwind, as well

Josh Selway
Sep 7, 2018 at 2:47 PM
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The shortened week on Wall Street centered around a major pullback in tech stocks. As the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) were hit hard, the Dow Jones Industrial Average (DJI) managed to avoid the headwinds for most of the week, until Friday when news hit that President Donald Trump was readying another round of tariffs on China. Trade tensions were already high, too, with the U.S. and Canada again failing to come to an agreement. Investors also digested a heavy dose of economic data, including the poorly received jobs report for August.

Major Losses for Social Media, Chip Stocks

Looking closer at this week's tech weakness, social media stocks were some of the biggest losers, as executives from Facebook (FB) and Twitter (TWTR) testified before Congress. The other group that struggled was semiconductor stocks. Much of the downfall was sparked my Micron's (MU) sharp decline, though AMD shares again managed to hit fresh highs.

Elsewhere in the tech space, analysts are staying bullish on Netflix (NFLX), while also raising their targets on rallying Twilio (TWLO). Fellow cloud stock Workday (WDAY) pulled back after earnings, and iRobot dealt with another bear note. Meanwhile, a regulatory breakthrough put this small-cap tech name in focus.

Nike Recovers From Kaepernick Blowback

While Apple (AAPL) managed to touch another all-time high thanks to bullish analysts, the broader tech swoon had it pulling back from this milestone by week's end. Nike (NKE), on the other hand, is set to end the week on a three-day win streak following the initial sell-off from a new "Just Do It" ad campaign featuring Colin Kaepernick. Fellow blue chips Chevron (CVX) and Caterpillar (CAT) fell, with options traders betting on more downside for the latter.

On the flip side, options activity has been very bullish on Dow component Walmart (WMT), and analysts see upside ahead. Staying in the retail sector, put players have been attacking China's JD.com, while bears are making a killing on struggling Barnes & Noble (BKS). Crocs (CROX), Kohl's (KSS), and Urban Outfitters (URBN) are all potential targets for options traders, as they try to replicate the performance of Five Below (FIVE).

ARWR Headlines Healthcare Movers

One of the biggest moves of the week came from the healthcare sector, where Arrowhead Pharmaceuticals (ARWR) soared thanks to upbeat drug data. Anthem (ANTM) also kept rising on bullish analyst coverage. Teva Pharmaceutical (TEVA) wasn't so lucky, trading down on a downgrade, much like weed stock Tilray (TLRY), while it was trial data that sank Sangamo Therapeutics (SGMO). As for prospective buyers, this biotech has attractive options.

TSLA Shares Go Up In Smoke

We also need to touch on the drama surrounding Tesla (TSLA), following more executive turnover and a viral video of Elon Musk smoking weed. This just added to an ugly weak for TSLA stock, which was also hit with a "sell" rating from Goldman Sachs. Touching on some other news in the auto space, Rev Group (REVG) took a hit after earnings, and this stock could be ready to bounce.

Top Stock Picks For Contrarians

While bracing for another round of economic data on next week's stock market schedule, traders can take a look at some of the top stocks for contrarian traders. Hopefully you can find the success of recent Square call buyers, though many may be wary of another broad-market pullback in September.


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