Dow Struggles For Direction During Earnings-Packed Week

Biden's new tax proposals put pressure on stocks this week, too

Digital Content Manager
Apr 23, 2021 at 2:30 PM
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Markets cooled down during the third week in April, coming off last week's slew of record highs and surging indexes. The major indexes dipped into the red on Monday as investors began to take profits on some of last week's impressive price action. The Dow wound up snapping a three-day win streak, while the tech-heavy Nasdaq suffered a triple-digit drop. The blue-chip index logged its second-straight drop on Tuesday, even after several big names, including Procter & Gamble (PG) and Johnson & Johnson (JNJ), came in with impressive quarterly reports.

Big-name reports continued to roll in on Wednesday, with all eyes on Netflix (NFLX), after its subscriber growth missed estimates, pouring cold water on many of its stay-at-home peers. Strength in small-cap stocks and "reopening" plays wound up pushing markets higher midweek though, as the S&P 500, the Nasdaq Composite, and the Dow rebounded. By Thursday news that U.S. President Joe Biden will propose higher capital taxes for Americans earning $1 million or more weighed heavily on stocks, sending all three indexes lower once more. Investors look to be brushing off this news during today's trading though. Stocks look poised for daily wins this afternoon, though all three indexes are headed for weekly losses. 

Digging Even Deeper Into Earnings Season

While we highlighted some of the bigger names to step into the earnings confessional, there was much more on the docket this week, and even more to look forward to as earnings season charges ahead. One name in particular that has Wall Street in a frenzy ahead of its annual report is Tesla (TSLA), as option bulls pile on the electric vehicle concern this week. Anthem (ANTM) calls were quite popular this week, too, after the company's upbeat Q1 reveal.

Meanwhile, mobile phone bigwig, Verizon (VZ) was unable to capitalize on earnings and revenue that topped analysts estimates. Other stocks making big moves following their quarterly reports include Snap (SNAP) and Intel (INTC), with the former surging on better-than-expected revenue, while the latter was blasted with bear notes after its second-quarter forecast missed analysts' estimates. 

Stocks Primed to Pop Next Month

Investors looking to pick up stocks on sale may want to consider looking at securities pulling back to historically bullish trendlines. A few names running into such trendlines this week are Sonos (SONO) and At Home Group (HOME), both of which are sporting relatively  inexpensive options at the moment, too. A few other stocks are flashing indicators of a potential move higher as well. Whirlpool (WHR), which has a history of positive post-earnings moves, and just hit  a fresh all-time high, looks ready for a round of bull notes. Lennar (LEN) could also be primed for fresh upgrades from the brokerage bunch, while one analyst is already speculating on a big rebound for Coupa Software (COUP) stock. 

Big Tech, Blue Chips Headline Another Week of Quarterly Reports 

Investors will start the week sifting through durable and core capital goods orders right off the bat, and then dive into the Case-Shiller home price index. Later on, all eyes will be on the latest Federal Reserve interest rate decision, in addition to initial and continuing jobless claims data. Further, traders will monitor the Chicago purchasing managers' index (PMI) and core inflation. The earnings confessional will be packed full of big tech and blue-chip names, including 3M (MMM), Alphabet, (GOOGL), Apple (AAPL), Eli Lilly (LLY), Tesla, and Pinterest (PINS). 

In the meantime, traders can check out the latest Monday Morning Outlook, in which Schaeffer's Senior V.P. of Research Todd Salamone breaks down the dangers of several repeating long-term technical patterns. Plus, Schaeffer's Senior Quantitative Analyst Rocky White looks into whether or not the S&P 500 can maintain its recent run up the charts. 


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