Volatile Week Ends in Benchmarks Snapping Win Streak

Inflation pressures weighed heavily on stocks this week

Deputy Editor
Nov 12, 2021 at 2:42 PM
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The week started off strong, with the major benchmarks extending their series of record closing highs into Monday, with help from the long-awaited passage of the $1 trillion infrastructure bill. By Tuesday, however, stocks were running out of steam, as investors began to take profits and inflation fears once again gripped Wall Street. The S&P 500 (SPX) wound up snapping an eight-day win streak, while the Nasdaq Composite (NDX) and Dow Jones Industrial Average (DJI) also took considerable breathers. Stocks continued to crash and burn on Wednesday, weighed down by the consumer price index's (CPI) biggest annual increase since 1990. October's CPI reading jumped 6.2% year-over-year, though jobless claims came in at another pandemic-era low. 

The Dow broke even lower on Thursday, collapsing under inflation pressures to mark its third-straight drop, though the Nasdaq and S&P 500 were able to shake off some of these concerns and log wins for the day. And while stocks appear to be on the rebound today, the weight of the market's midweek selloff is looking to be too much to bear, and all three indexes are set to snap a five-week win streak. 

Making a Case for Buying the Dip 

This week we focused on several stocks that pulled back after October's rally, but just flashed "buy" signals, according to studies from Schaeffer's Senor Quantitative Analyst Rocky White. Two stocks in particular, Hostess Brands (TWNK) and Sony Group (SONY) were highlighted, after pulling back from record highs earlier in the month.  Meanwhile, Netflix (NFLX) and MGM Resorts International (MGM) stocks also cooled from highs, though these dips could be short-lived. On the other end of the spectrum, we made the case for betting on a move lower from Exxon Mobil (XOM), which could feel sector-wide repercussions in the near future. 

 

Stock-Moving Analyst Calls to Note

Markets were filled with analyst chatter this week, as the brokerage bunch got busy handing out bull and bear notes to a number of key names. A few stocks getting upgrades this week were Cinemark (CNK), which was commended on its competitive pricing, and Caesars Entertainment (CZR), which B Riley Securities called a "mispriced empire." SoFi (SOFI) also enjoyed a price-target hike from Jefferies after earnings. Not every equity was so lucky, though. Both Krispy Kreme (DNUT) and Nvidia (NVDA) were hit with pre-earnings downgrades, while Poshmark (POSH) suffered a round of price-target cuts after trimming its holiday-quarter forecast

Week Before Thanksgiving Highlights Retail Earnings

A huge number of earnings releases from Chinese and retail companies will be due out next week, including reports from Alibaba (BABA), Baidu (BIDU), Bilibili (BILI), Cisco (CSCO), Foot Locker (FL), Home Depot (HD), JD.Com (JD), Kohl's (KSS), Lowe's (LOW), Macy's (M), Nvidia (NVDA) Sonos (SONO), Target (TGT), Tyson Foods (TSN), Walmart (WMT), and Williams-Sonoma (WSM).
 
Several key economic indicators will also trickle in, including data on retail sales, the import price index, and the National Association of Home Builders' (NAHB) index. In the meantime, traders might want to keep an eye on the recent surge in options volume as well as what the S&P 500 and Nasdaq's streak of record closes could mean for markets long-term. 

Trader: Sell These 8 Stocks in 2021

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