U.S.-China Tensions, Vaccine Optimism Define Roller Coaster Week

All three benchmarks are headed toward weekly losses

Fernanda Horner
Jul 24, 2020 at 12:34 PM
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A revved-up earnings season, more positive vaccine news, and growing U.S.-China tensions highlighted the last five days on Wall Street. The week kicked off on an upbeat note, as indexes pared earlier losses, the Nasdaq scored a few intraday record highs, and AstraZeneca (AZN) announced a robust immune response for its potential COVID-19 vaccine it is working on with the University of Oxford. By Tuesday, the Dow was up nearly 160 points, boosted by blue-chip earnings reports.

Mid week, a vaccine deal between the U.S. government, Pfizer (PFE), and BioNTech (BNTX) boosted investor sentiment, though escalating tensions between the U.S. and China, as well as bank stocks pared the broader market's gains. By Thursday, tech deepened its sell-off, weighing heavy on the broader market as Microsoft (MSFT)  and Apple (AAPL) dropped over 4%. By Friday, the early-weekly momentum had vanished and all three benchmarks were staring at weekly losses.

Household Names in the Spotlight

Several household names made headlines this week. On Monday, Delta Air Lines (DAL) was higher after the airliner told pilots it would avoid furloughs for up to one year if they agreed to reduce their guaranteed minimum pay. Then on Wednesday, chip stalwart Advanced Micro Devices (AMD) broke out for outsized gains in the wake of Texas Instruments' (TXN) blowout corporate report and Best Buy's (BBY) encouraging sales numbers. That same day, Twitter (TWTR) was down ahead of its second-quarter report.

By Thursday, Chipotle Mexican Grill (CMG) was also down, despite beating Wall Street's earnings estimates and walking out with no less than 14 price-target hikes thanks to soaring digital sales. The same cannot be said for Southwest Airlines (LUV), however, which was down after reporting a wider-than-expected second-quarter loss. Also on Thursday, Hasbro (HAS) stock was up, with bulls eyeing the toymaker ahead of its earnings event next week. Blue-chip Walt Disney (DIS) took a hit to end the week, after  announcing it would delay its newest "Mulan" movie indefinitely as theaters remain shut to curb the spread of COVID-19.

A Shaky Week for Retail Stocks

Retail stocks experienced their fair share of ups and downs this week. On Tuesday, Amazon (AMZN) was lower after the company once again postponed Prime Day -- its high-profile online shopping event -- as it struggles to return logistics operations to normal. The next day, however, fellow e-commerce name Shopify (SHOP) was higher after it earned two price-target hikes, attributed to a "strong recovery" and expanded product offerings. On Thursday, brokerage firms weren't feeling optimistic about Macy's (M) and Kohl's (KSS), downgrading the department store stocks to "sell" from "neutral," and questioning their relevancy as customers shift to online shopping in light of the pandemic. But it wasn't all doom and gloom; Under Armour (UAA) stock picked up a bull note to end the week.

Economic Data, Earnings Season in Focus Next Week

Next week will be fairly busy in terms of earnings and economic data, with a whole slew of blue-chip names and Big Tech giants to set foot into the earnings confessional. In addition, investors will be combing over quarterly reports from two major names in the race for a coronavirus vaccine. On the economic front, jobless claims, a second-quarter gross domestic product (GDP) reading and the Fed's latest interest rate decision will be in focus. 

Until then, you can find out how the market usually performs over the next two months during presidential election years, and take a look at this signal that says now is the right time to buy silver.


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