Vaccines, China Trigger Roller Coaster Week for Stocks

All three benchmarks are cruising toward sizable weekly wins

by Patrick Martin

Published on May 22, 2020 at 2:59 PM

The coronavirus pandemic is still very much a dire issue in the U.S., but economies are starting to reopen and that seems to be enough for Wall Street. The Dow Jones Industrial Average (DJI), the S&P 500 Index (SPX) and the Nasdaq Composite (IXIC) are all cruising toward sizable weekly wins, as investors unpack a host of volatile headlines for the last five days. A possible coronavirus vaccine drove stocks higher earlier in the week, helping the Dow and S&P 500 nab their best day in six weeks. A resurgent tech sector helped indexes hold on to gains, even as jobless claims continue to pile up. And despite the overall optimism being pumped back into the economy, China tensions loom large amid some late-week developments.

Busy Week for Blue-Chips, Post-Earnings Reactions

It was a busy week for blue-chips. Walt Disney (DIS) started things off announcing the reopening of its theme parks. A first-quarter earnings miss knocked Home Depot (HD) off its pedestal, while Johnson & Johnson (JNJ) pulled its controversial talc-based baby powder. And taking cues from its sector peers, Mastercard (MA) joined the work-from-home bandwagon with its new policy.

Lost in the shuffle of all the headlines was a flurry of earnings stragglers. Retailer Urban Outfitters (URBN) picked up bear notes before its own corporate report. Advance Auto Parts (AAP) shook off an earnings miss, while Palo Alto Networks (PANW) won big after a top-line beat that garnered the attention of options traders and analysts alike.

COVID-19 Driving Headlines Once More

Thanks to the "new normal," most headlines can be traced back to COVID-19. Moderna (MRNA) and its "breakthrough" vaccine captured everyone's attention early in the week, including options traders. Cleaning products giant Clorox (CLX) has enjoyed tailwinds during the pandemic, and now has an airline partnership to show for it. And speaking of airlines, Southwest (LUV) enjoyed gains this week as flight reservations increased.

Among stock charts to watch, grocery stock Kroger (KR) pulled back to a historically bullish trendline, while mining stock Alamos Gold (AGI) flashed a bullish signal of its own. Square (SQ) stumbled into overhead resistance after a downgrade, and telehealth giant Teladoc (TDOC) has a chart worth looking into.

Memorial Day Week Looms

Next week the calendar is shortened for Memorial Day and socially-distant barbecues. To prepare for the end of May, Schaeffer's Senior Quantitative Analyst Rocky White broke down the best-performing and worst-performing stocks the week of Memorial Day. From a broader perspective, Thursday might be the best day to buy stocks next week, but make sure to heed this technical level on the S&P 500 as the month closes out.

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