Strong First Week of August Marred by Stimulus, China Tensions

Jobs data turned positive by the end of the week

Deputy Editor
Aug 7, 2020 at 1:28 PM
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Volatile sentiment surrounding the stalled second stimulus bill in congress permeated through the market this week, as investors listened for cues as to whether the stiff negotiations would soon be finished. To start the week, the Nasdaq hit a record intraday high, boosted by outperforming Microsoft (MSFT) after its proposed purchase of the TikTok app. Positive manufacturing data also led the indexes higher, with the Nasdaq extending its Wednesday record high on Thursday, alongside the Dow and SPX's fifth-straight wins.

Jobs data went from bleak to optimistic as the week went on, though surrounding sentiment dampened its move higher. First came dismal private payroll data midweek, followed by positive weekly jobless claims the next day, and better-than-expected employment data on Friday. To end the week, rising U.S.-China tensions and stimulus uncertainty finally got the better of the market, though the indexes are still on track for weekly wins. 

Drug Stocks Back in the Headlines

Most associate a potential coronavirus vaccine with Pfizer (PFE), Moderna (MRNA) (which pulled back to a bullish trendline this week), or Novavax (NVAX). But don’t count out Regeneron Pharmaceuticals (REGN), which earlier this week touted its covid-19 antibody drug, after it scored upbeat results on rhesus macaques and hamsters. 

Among earnings winners, pharmacy giant CVS Health (CVS) climbed the charts after an encouraging corporate report. Elsewhere, gene therapy name Crispr Therapeutics (CRSP) is flashing a bullish signal of its own, while medical device maker DexCom (DXCM) is one stock to target in August. And in M&A news, embattled pharmaceutical stock Bausch Health (BHC) spun off its eyecare business into its own separate publicly-traded company.

Gold, Oil Sectors Make Moves

Both gold and oil stocks have been getting some attention this week. For oil, when taking a look at the 25 worst stocks to own in August, we noted that a myriad of names from this sector appeared. Specifically, Exxon Mobil (XOM) and Chevron (CVX) surfaced as two of the worst performers in the month, over the past 10 years.

Meanwhile, one gold stock that made the list of the 25 best stocks to own in August was Newmont (NEM), which is fresh off record high territory. Echoing this outperformance is Kirkland Lake Gold (KL), which landed a price-target hike from BofA Global Research on Wednesday.

Earnings Season Set to Wind Down

Earnings season is winding down, though reports from several heavy hitters continue to trickle in. Gold stocks will be in focus again next week, with quarterly reports due out from sector members Barrick Gold (GOLD) and Wheaton Precious Metals (WPM). Several big names out of China will enter the earnings confessional, too. The economic calendar, meanwhile, is buzzing with activity next week, too. The latest Job Openings and Labor Turnover Survey (JOLTS) is due out, as well as the Consumer Price Index (CPI).

Before then, take a look at what Schaeffer’s Senior Quantitative Analyst Rocky White had to say about the key market indicator that could be signaling more gains ahead for the Nasdaq. Also catch up on the sentiment indicator that could be flashing a caution signal for investors.


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