Fed Minutes, Retail Data Weighed on Wall Street This Week

The retail sector starred on the earnings docket

Digital Content Manager
Aug 20, 2021 at 3:13 PM
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It has been a tumultuous last few days on Wall Street, after the Federal Reserve's meeting minutes cast a shadow over investor sentiment mid-week. The week started off on a good note, though, as both the Dow and S&P 500 notched their fifth-straight record closes on Monday, despite falling earlier in the day. Traders were on high alert, as the Taliban took over Afghanistan following the removal of U.S. troops. Things took a turn for the worse on Tuesday, after dismal U.S. retail sales data drove the blue-chip index to shed triple digits and snap its win streak, as the Cboe Volatility Index (VIX) roared back to life.

Wednesday did not offer much reprieve, with minutes from the Fed's July meeting revealing that the central bank discussed tapering off stimulus by the end of 2021,despite the Covid-19 pandemic, which has seen a surge in cases due to the delta variant. That pessimism lingered on Thursday, with the Dow nabbing its third-straight daily drop as the Fed's comments continued to haunt Wall Street. However, first-time jobless claims reached a new pandemic-era low, injecting some positivity into the markets. The three major benchmarks staged a rebound on Friday, with big-name tech stocks paving the way, though at last check all three were still pacing for considerable weekly losses.

Retail Sector Stars on Earnings Docket

The retail sector was undoubtedly the star of the show this week. Options traders rushed to Walmart (WMT) ahead of its second-quarter earnings report, anticipating it to post higher sales as back-to-school shopping makes a comeback. Home Depot (HD) also saw an unusual amount of options activity, after it posted a same-store sales miss. Meanwhile, Buckle (BKE) stood out as one small-cap stock not to be overlooked. Lowe's (LOW) also stepped into the earnings confessional with a beat-and-raise, while Foot locker (FL) hiked dividends just days before its own earnings event. Kohl's (KSS) was yet another name with impressive earnings results, alongside Petco (WOOF), which earned bull notes after raising its full-year guidance. To wrap up the week, retail behemoth Macy's (M) scored a 2-year high after several analysts chimed in with praise.

 

Tech Stocks Making Moves

Investors also had a slew of tech news to unpack this week. Seagate Technology (STX) kicked off the week with an upgrade, while Paysafe (PSFE) received a barrage of bear notes after posting an earnings miss and announcing a $441 million cash deal to buy SafetyPay. Semiconductor name Nvidia (NVDA) made headlines, as it cooled off ahead of its second-quarter earnings call. BlackBerry (BB) was able to brush off the controversy around its QNX software, however, with an upgrade from Canaccord Genuity. Elsewhere, options traders blasted Cree (CREE) as the stock tumbled.

Some other major names attracted attention as well. Specifically, Cisco (CSCO) was also getting blasted in the options pits, after its current-quarter profit forecast came in below estimates. There was also Apple (AAPL), which received a bull note from J. P. Morgan Securities. Market newbie Robinhood (HOOD) spooked traders, though, after issuing a growth warning. Options bears were quick to pile on on DoorDash (DASH), after SoftBank sold its stake in the company. Salesforce.com (CRM) had better luck, earning a new bull note ahead of next week's quarterly results. Plus, Adobe (ADBE) scored a fresh record high on its latest acquisition.

August Charges Forward with Retail Earnings, Data

Investors can expect plenty of economic data next week, though the earnings docket looks quieter, as the earnings season continues to unwind. Still, a decent amount of big companies have yet to report their results, including Abercrombie & Fitch (ANF), Best Buy (BBY), Dick's Sporting Goods (DKS), Dollar General (DG), Dollar Tree (DLTR), JD.com (JD), Palo Alto Networks (PANW), Peloton (PTON), Salesforce.com (CRM), Snowflake (SNOW), Ulta Beauty (ULTA), Urban Outfitters (URBN), and Williams-Sonoma (WSM). In terms of data, the Markit manufacturing purchasing managers' index (PMI) is due out, in addition to new and existing home sales, personal income, and consumer goods data. Until then, keep an eye on credit investors and figure out why options traders are now loading up on junk bonds.

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