Cheerful Stock Sentiment Wanes Despite Nasdaq's Record Win

All three benchmarks are heading toward weekly losses

Laura McCandless

Deputy Editor

Jun 12, 2020 at 2:33 PM

The week started out promising for the stock market, as reopening optimism permeated throughout Wall Street -- despite the official announcement of a U.S. recession entered in February. However, airline stocks were a good indicator for this volatile stretch, weighing heavily on the Dow Jones Industrial Average (DJI) in the middle of the week, though pushing the benchmarks upwards on Monday and Friday. The S&P 500 Index (SPX) struggled for traction alongside the blue-chip index, with travel stocks joining the roller-coaster. The real star of the week was the Nasdaq Composite (IXIC), after hitting a record high and closing above 10,000 for the first time ever on Wednesday, before promptly snapping its four-day win streak on Thursday as all three major indexes landed their worst day since mid-March. With plenty to unpack, including the Federal Reserve’s update, and a spike in coronavirus cases, all three benchmarks remain wary of the recent rally amid sharp weekly losses.

Tech a Safe Bet Amid Renewed Coronavirus Concerns

The tech sector played a fundamental role in the Nasdaq's record-setting week, building on its breakneck rally, as various high-profile names such as FAANG stock Facebook (FB) and cloud stock Adobe Systems (ADBE) nab new record highs. It wasn't all sunny to start though, with Apple (AAPL) taking a breather from its own highs and Amazon.com (AMZN) facing pressure from the European Union (EU). Nevertheless, Nasdaq quickly marched forward, completing its V-bottom from its early-March lows.

Companies Navigate Sales and Reopenings

With businesses reopening country-wide, many that haven't already made changes are mapping out their best plan of action. Expanding its initiatives to better deal with the impact, Party City (PRTY), is shaking off quarterly earnings and revenue losses. As companies wrestle with their lower-than-expected quarterly reports during this time, Children's Place (PLCE) was also one of many to pull its full-year guidance. Meanwhile, furloughed employees returned to Best Buy (BBY), which gave the stock a boost. Elsewhere, Transocean (RIG) and Occidental Petroleum (OXY), hit especially hard by the pandemic along with the oil and gas sector attempted rebounds

Quiet Week Ahead as Speculation Ensues

The economic calendar is looking somewhat bare next week, though investors will have their eyes on Thursday's weekly employment update, as well as retail data earlier in the week -- two indicators that have helped gauge the economic environment as lockdown measures continue to ease in the U.S. Meanwhile, consider this options strategy that limits market exposure amid the recent volatile stretch.

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