Late-Week Sell-Off Drags Dow from Record High

Tesla had its best day in five years on Monday

Oct 5, 2018 at 3:45 PM
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Blue chips started the week strong, with industrial stocks Boeing (BA) and Caterpillar (CAT) racing higher on news of the United States-Mexico-Canada Agreement (USMCA) trade deal -- effectively replacing the North American Free Trade Agreement (NAFTA). While the Dow carved out a new record high on Wednesday, the S&P 500 Index (SPX) came within a chip-shot of taking out its late-September all-time peak.

The benchmarks came crashing down on Thursday, though, after Bloomberg reported a potential hardware hack by Chinese spies on several high-profile U.S. tech firms. While the Dow snapped its five-day win streak, the SPX logged its worst day since late June, and the Nasdaq -- which had already been lagging -- widened its week-to-date deficit. Surging bond yields only added to the risk-off backdrop, with 10-Year Treasury yields holding near seven-year highs after the mixed jobs report. As such, the Cboe Volatility Index (VIX) surged, likely catching those short volatility traders off-guard once again.

Super Micro Computer Spirals on Chinese Hacking Report

Amazon (AMZN) was already staring at a week-to-date deficit ahead of the Bloomberg report, after the e-tailer said it was raising the minimum wage for its employees to $15 per hour. The FAANG stock is now headed toward its worst week since February, while Apple (AAPL) is clinging to a weekly gain. However, it was Super Micro Computer (SMCI) that took the biggest hit, on reports that the company's motherboards were used in the potential attack by China.

Elsewhere in the tech sphere, camera maker GoPro (GPRO) swung wildly after news of strong HERO7 Black sales. And while Tesla (TSLA) notched its biggest one-day gain in five years on the back of Elon Musk's settlement with the Securities and Exchange Commission (SEC), Berenberg grew bullish on video game stocks.

GE, SFIX Stocks Were Some of Wall Street's Biggest Movers

Weed stocks stayed on Wall Street's radar this week, with Pyxus International (PYX) gapping higher on a big regulatory win in Canada. Among other big stock gainers this week were General Electric (GE) and Fiat Chrysler (FCAU), which both popped on C-suite news.

On the flip side, these three drug stocks got crushed, while Stitch Fix (SFIX) spiraled after earnings. Plus, SAExploration (SAEX) stock is headed toward a nearly 31% weekly loss following Thursday's wild trading, and Costco (COST) is slipping after the retailer's quarterly results.

Stock Buy and Sell Signals

Not all hope is lost, with plenty of stocks flashing historical buy signals, including this oil name whose options are on sale right now. This tech stock could also be ready to rally, if past is precedent. And while these securities are currently boasting the longest quarterly win streaks on Wall Street, bulls may want to beware of these utility names, which are two of the worst stocks to own in the fourth quarter.

Bank Earnings, Fed Speeches on Tap

This volatile price action could continue in the near term, with third-quarter earnings season set to kick off next week. Big banks will headline the early action, while Walgreens Boots Alliance (WBA) will get the ball rolling for blue chips. Several Fed speakers are on tap, too, following last week's market-moving speech from Fed Chair Jerome Powell.

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