Fear Grips Wall Street as Earnings Roll In

The Nasdaq is on track to log its longest weekly losing streak since August 2017

Oct 26, 2018 at 1:51 PM
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It was a wild week on Wall Street, with the Dow exploring a more than 1,000-point range on both sides of breakeven, as of this writing. Most of the price action occurred to the downside, with the Dow, S&P 500 Index (SPX), and Nasdaq Composite (IXIC) all pacing for weekly losses -- the latter for its fourth in a row, which would mark its longest weekly losing streak since August 2017. What's more, the Nasdaq is set to close the week in correction territory, after entering it on Wednesday.

While uncertainty surrounding Saudi Arabia's potential involvement in the death of journalist Jamal Khashoggi initially weighed on investor sentiment to start the week, the bulk of the selling came at the hands of disappointing corporate earnings. Whatever the reason, fear gripped the Street -- sparking an influx of bearish options trading -- with the Cboe Volatility Index (VIX) flashing a rare signal that could spell more short-term stock weakness.

Big-Cap Earnings Blast Wall Street

Some of the most talked-about earnings this week came from blue chips, with Caterpillar (CAT) plunging on disappointing forecast, and 3M (MMM) sinking on a big revenue miss. On the flip side, Boeing (BA) surged after earnings, while a post-earnings bull gap for Microsoft (MSFT) helped send the Dow up more than 400 points on Thursday.

Elsewhere, negative earnings reactions for FAANG stocks Amazon (AMZN) and Alphabet (GOOGL) put the final nail in the coffin for stock markets on Friday, while Snap (SNAP) fell to a new record low after the social media name gave a dismal outlook for a key metric. Chip stocks took a big hit, too, as weak guidance from Texas Instruments (TXN) and STMicroelectronics (STM) and a rare revenue miss for Western Digital (WDC) weighed on the sector.

Stocks Moving on FDA Decision, Activist Chatter

Not all the news was about earnings, though. The shares of Bristol-Myers Squibb (BMY) plunged more than 6% on Monday after a key Food and Drug Administration (FDA) decision, while these three stocks popped on activist chatter. The brokerage bunch was busy this week, too, with Chipotle (CMG) bouncing on a fresh upgrade, and JetBlue (JBLU) getting blasted by bear notes.

Broad-Market Pullback Creates Buying Opportunities

The broad-market headwinds may have created several "buy the dip" scenarios among individual stocks, with Corning (GLW) trading near trendlines that have marked an attractive entry point for a bullish trade in the past. Plus, this weed stock just flashed a buy signal that's never been wrong. And while Evercore suggested housing stocks are oversold, Citron Research went long on Tesla (TSLA).

Facebook Earnings, Jobs Report on Tap

Earnings season stays hot next week, with Apple (AAPL), Facebook (FB), and Electronic Arts (EA) among the high-profile names slated to report. And while a busy economic schedule will be punctuated by the October jobs report, these railroad stocks could be ready to rally into the new month.

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