Stocks See Volatile Week Amid Vaccine, Stimulus News

Worse-than-expected jobless claims also dampened investor sentiment

Digital Content Manager
Dec 11, 2020 at 12:33 PM
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Stimulus negotiations and COVID-19 vaccine news were front and center over the past few days, taking up most headlines as they made up for a volatile week. The Dow and S&P were knocked off record levels on Monday, after a lack of progress in Congress weighed on investors' minds. Regardless, the Nasdaq scored its third-straight gain and an intraday record thanks to the tech sector. Uplifting vaccine news boosted sentiment on Tuesday, as the U.K. became the first country to administer Pfizer's (PFE) coronavirus vaccine, and the U.S. Federal Drug Administration (FDA) said the shot did not present any safety concerns. 

By Wednesday, much of that optimism had faded. The major indexes reversed vaccine-fueled records to finish the day in the red, after Senate Majority Leader Mitch McConnell said lawmakers were “still looking for a way forward" following a $916 billion bipartisan stimulus package proposal. That day, the U.S hit a record of 15 million infections, with an average of 200,000 Americans testing positive for the virus each day. Disappointing jobless claimsas well as a stimulus stalemate, did nothing to help stocks on Thursday. Technology stocks gained, however, as traders waited for the outcome of a FDA meeting regarding the vaccine. As of Friday afternoon, the major benchmarks were headed for weekly losses, with stimulus negotiations going nowhere and a vaccine approval still pending.

Blue-Chip Stocks in the Spotlight

A small handful of blue-chip stocks were in the spotlight this week. For one, JPMorgan Chase (JPM) made it to Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 best stocks to own in December. Cisco (CSCO) was also turning heads, after the tech giant slipped following its acquisition of IMImobile for $730 million, stepping firmly into "overbought" territory. McDonald's (MCD) attracted negative attention as well, moving lower after a downgrade from Stephens to "equal weight" and a price-target cut to $225.

Retail Sector Weighs Mix of Bull, Bear Notes

There was no shortage of retail sector news for investors to unpack, either. On Monday, Ford (F) dropped after it pushed back the launch of its Bronco SUV until summer 2021. Chewy (CHWY), on the other hand, reeled in a slew of bull notes after a third-quarter earnings beat. GameStop (GME) was not so lucky, taking a deep dive after a revenue miss. Meanwhile, a bullish signal flashing for Cotsco (COST) suggested the stock has plenty of room to run. The situation is much more dire for Best Buy (BBY), after Goldman Sachs slammed the retailer with a bear note and said it is "near peak" valuation.

Tech Stocks Struggle with Major Headlines

Yet, the focus this week was heavily on the tech industry. Snap (SNAP) was higher to start off Monday, after consistent attention in the options pits. On Tuesday, however, Uber (UBER) dropped after selling its self-driving unit to a startup competitor. FireEye (FEYE) was not doing so hot, either, following a security breach that resulted in some tools being stolen. Ciena (CIEN) was lower as well ahead of its fourth-quarter earnings report

The real pressure was on Facebook (FB), though, when the Federal Trade Commission (FTC) and 48 states filed lawsuits against the social media giant and accused it of anti-competitive practices. And while software giant Adobe (ADBE) reported an earnings win on Thursday, it still couldn't move up the charts. The same can't be said for the surging Fastly (FSLY), which may be an attractive target for options bulls moving forward.

Packed Week Brings Fed Meeting, Manufacturing Data

Traders are looking ahead to December's halfway point, with a handful of major names set to step into the earnings confessional next week, including Lennar (LEN), Carnival (CCL) and Navistar (NAV), as well as FedEx (FDX) and Nike (NKE), to name just a few. In terms of economic indicators, a two-day Federal Reserve meeting will take place. In addition, import price and manufacturing indexes are due out, on top of retail sales, housing starts and inventories data. Until then, brush up on how a big move into equity-based ETFs can drive stocks, and get a sense for how the SPX usually performs during the second half of December.

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