Dow Logs Dismal Week Amid Interest Rate Fears

The S&P 500 and Nasdaq started the week with record highs

Assistant Editor
Jun 18, 2021 at 3:28 PM
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This week was packed with not so sunny news, though a bright spot did shine through on Monday, as the S&P 500 and Nasdaq both scored record highs. Meanwhile, the Dow  logged a small loss as investors held their breath over a two-day Federal Reserve policy meeting. That anxiety carried over to the next session, with all three major indexes falling as the Nasdaq also snapped a three-day win streak.

Investors' worries were not all for naught, however, as Wednesday saw the Federal Open Market Committee (FOMC) signal interest rates could rise sooner than expected, sinking down stocks. On Thursday, the blue-chip index fell even lower after the release of worse-than-expected weekly jobless claims data. Though Big Tech jumped toward the end of the session, pushing the Nasdaq to a win, the Dow logged its fourth-straight loss. As of Friday afternoon, the Dow was down nearly 500 points, pacing for its worst week in over four months, after more interest rate news signaled hikes could be closer still. In response, all three major benchmarks were eyeing substantial weekly losses.

Options Traders Get Speculative 

Options traders were eager to speculate this week, with plenty of action from both bulls and bears. Amid the meme stock craze, Corsair Gaming (CRSR) caught the attention of investors. Nucor (NUE), meanwhile, attracted bears, despite receiving a bull note from Morgan Stanley. Put traders also blasted Lennar (LEN), even after it reported a fiscal second-quarter earnings beat. Lastly, streaming name FuboTV (FUBO) has been muted for most of the month, though that didn't stop options bulls from tuning in.

 

Checking In on Pharma Stocks

A number of pharmaceutical stocks made headlines this week. Once a Reddit darling, Orphazyme (ORPH) got hit after the Food and Drug Administration (FDA) rejected the company's experimental genetic disorder drug candidate. Sage Therapeutics (SAGE), which is closely tied to Biogen (BIIB), was also rocked after reporting dismal late-stage trial results for its depression drug. Meanwhile, Covid-19 vaccines were also in focus. Ocugen (OCGN) struck a manufacturing partnership deal with Jubilant HollisterStier, though its vaccine candidate has not yet been approved. Plus, CureVac (CVAC) stock plummeted, after its vaccine proved to be only 47% effective in a clinical trial.

A Period of Low Volatility Could Be Right Around the Corner

Earnings reports will continue to trickle in next week, with CarMax (KMX), Darden Restaurants (DRI), FedEx (FDX), and Nike (NKE) all set to report. However, investors may be more focuses on FOMC updates, given the recent Fed news. In the meantime, see why Schaeffer's Senior Quantitative Analyst Rocky White's thinks a period of low volatility may be ahead. Traders should also check out what was expected heading into June expiration week

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