Earnings, Fed Minutes Result in See-Saw Week for Stocks

FAANG stocks Amazon and Alphabet could move after earnings next week

Oct 19, 2018 at 3:08 PM
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It was another roller-coaster week on Wall Street, as traders digested a slew of big-cap earnings reports and the latest economic data. September retail sales spooked investors early in the week, and another spate of lackluster housing data didn't help. In addition, the minutes from the Fed's September meeting took traders on a wild ride mid-week, paring a portion of Tuesday's earnings-inspired gains. In the end, the bulls won the proverbial tug-of-war, with the Dow and S&P set to snap their weekly losing streaks. The tech-rich Nasdaq, however, isn't looking so fortunate.

Blue-Chip Earnings Take Center Stage

A handful of blue chips stepped into the earnings confessional this week. Traders applauded strong reports from Goldman Sachs (GS), Johnson & Johnson (JNJ), and UnitedHealth (UNH) early in the week, with the trio sending the Dow to a 567-point gain on Tuesday. In addition, American Express (AXP) and Procter & Gamble (PG) enjoyed positive earnings reactions. However, IBM Corp (IBM) wasn't as fortunate.

Netflix Earnings Report Disappoints Bears

FAANG member Netflix (NFLX) also stepped into the earnings spotlight this week. The streaming content titan reported solid third-quarter earnings and subscriber growth, much to the dismay of recent Netflix bears. Meanwhile, Netflix rival Roku Inc (ROKU) enjoyed a halo lift, as well as a major courtroom win. Elsewhere in the FAANG world, Apple (AAPL) announced an Oct. 30 event, while Sirius XM (SIRI) inked a partnership with Amazon (AMZN).

Weed, Healthcare Stocks Make Noise

Canada officially legalized recreational marijuana on Wednesday. However, traders apparently "bought the rumor, sold the news," as many pot stocks declined mid-week, after moving higher on Monday and Tuesday. Several healthcare stocks also made noise: Abbot Laboratories (ABT) dipped after earnings; Novartis (NVS) made a $2.1 billion buy; and analysts waxed optimistic on this pair of low-dollar pharma stocks. On the other hand, Citron Research said this biotech stock will fall 86%.

Rare Stock, Sentiment Signals Flashing

In light of the recent stock market sell-off, Wall Street bulls recently hit the exits at the fastest pace since February 2016. However, this rare sentiment signal could be good news for stocks in the short term. In addition, the number of optionable stocks that hit a new 52-week low recently spiked, but if history is any indicator, it could mean big gains ahead for the S&P. Small-cap stocks, too, could outperform in the near term, assuming we've hit a bottom.

More FAANG Earnings Ahead

The volatile price action could continue as more earnings reports roll in. Amazon and Google parent Alphabet (GOOGL) will unveil their quarterly figures next week, along with Boeing (BA), Halliburton (HAL), and several car concerns. Outside of earnings, traders are anticipating the latest gross domestic product (GDP) estimate, set to punctuate the week on Friday.  

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