Big Tech Misstep Threatens Weekly Wins for Major Indexes

Big Tech is still struggling after a dismal week

Deputy Editor
Sep 18, 2020 at 3:04 PM
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The week began on a positive note, with the Dow seeing a big rise thanks to a brief rally from Apple (AAPL). That momentum carried into the next day as the blue-chip index -- alongside the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) -- settled in the black to finish Tuesday’s session. Wednesday saw the U.S. Federal Reserve pledge to keep interest rates at or near zero until at least 2023, while the tech sector’s rally started to taper. By Thursday, mixed messages regarding the coronavirus vaccine timeline and Big-Tech’s selloff began dominating headlines, resulting in all three major indexes notching hefty losses. On the heels of the follies in the latter part of the week, all three indexes are failing to eke out weekly gains.

Billion-Dollar Deals and C-Suite Shakeups Take the Stage

It was a week checkered with groundbreaking deals. One of the more notable ones was Gilead Sciences' (GILD) acquisition of Immunomedics (IMMU) for $21 billion, of which, analysts were quick to pile on in response. Meanwhile, Metlife stock was boosted after the life insurance giant acquired Davis Vision and Superior Vision owner, Versant Health. The transaction came with a $1.68 billion, all-cash receipt.

More corporate news dominated the headlines as well, with Kraft Heinz (KHC) standing out in particular, after the company pledged to cut $2 billion in costs over the next five years. Elsewhere, Sirius XM stock fell substantially after the broadcasting company’s current CEO announced his retirement.

Analyst Upgrades Roll in as Earnings Slow

With earnings calming down, this week was slammed with analysts dishing out upgrades. Thermo Fisher Scientific (TMO), for instance, received an “overweight” rating and a nifty price-target hike from Morgan Stanley. Elsewhere, Kate Spade parent Tapestry (TPR), caught the attention of Deutsche Bank, who upgraded the equity to “buy” from “hold.” Lastly, Piper Sandler initiated coverage with an “overweight” rating for CVS Health (CVS), after noting that the healthcare company is well-positioned to provide quality care at reduced costs.

Earnings to Pick Up, Plethora of Economic Data on Deck

Those disappointed by the lack of earnings this week need not fret, as next week will feature an earnings docket that is packed to the brim. That’s not to say there’s no economic data, because the opposite couldn’t be truer. Home sales, crude oil inventory, and mortgage reports will all be reported on throughout the week, while the Mortgage Bankers Association of America (MBA) is set to release a report on Wednesday. Additionally, more weekly jobless claims are due out on Thursday. Circling back to earnings, some of the major companies that are slated to report include Nike (NKE), General Mills (GIS) and Costco Wholesale (COST).

In the meantime, take a look at Schaeffer's Senior Quantitative Analyst Rocky White's analysis of window dressing and the best stocks to buy and sell ahead of the time of the season when the trend takes off. Additionally, Senior V.P. of Research, Todd Salamone can hold your attention with a look at investor sentiment, and what it can predict concerning the market’s next moves.


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