The consumer price index (CPI) for May saw its sharpest rise since 1981
Concerns over the state of the economy dominated Wall Street this week. While stocks ultimately finished above breakeven on Monday, volatility maintained its iron grip on the market, with all three major benchmarks paring gains by the end of the session. The 10-year Treasury yield was to blame, after it reached its highest level in more than a month, stifling the tailwinds U.S. President Joe Biden's plan to lift specific tariffs generated. Those gains came on Tuesday, despite Target's (TGT) slashed profit forecast. The Dow Jones Industrial Average (DJI) scored a notable win, though investors still feared a potential recession, after the Atlanta Federal Reserve’s GDPNow tracker showed lackluster growth for the second quarter.
Steep losses followed on Thursday, however, as bond yields rose once again, igniting economic growth fears. Still, the Cboe Volatility Index (VIX) recorded its lowest close since April 21. Those losses deepened on Thursday, with the Dow tumbling, while both the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) plummeted as well. Disappointing jobless claims data, in addition to jitters over the consumer price index (CPI) for May, weighed on sentiment. The long-awaited inflation data came on Friday, much to Wall Street's dismay, as the CPI scored its sharpest rise since 1981. At midday, all three major indexes were lower, while eyeing second-straight weekly losses.
Analyst Attention This Week
Brokerage firms were particularly active over the last few days. Raymond James said Spotify (SPOT) is more reliable than streaming name Netflix (NFLX), the latter of which earned a downgrade at Goldman Sachs. The analyst also turned bearish on Docusign (DOCU) following its dismal earnings results. Five Below (FIVE) also took a post-earnings drubbing, attracting no fewer than 11 price-target cuts.
It wasn't all doom and gloom, though. Exxon Mobil (XOM) popped after Evercore ISI upgraded it on a move deemed a "valuation call." Peabody Energy (BTU) was also in analysts' good graces, with Jefferies bumping the security amid higher energy prices. Meanwhile, Ollie's Bargain Outlet (OLLI) brushed off a slew of bull notes, and Freeport-McMoRan (FCX) edged lower despite a Credit Suisse upgrade. Spirit Airlines (SAVE) received an upgrade as well due to the likelihood of a merger deal with JetBlue Airways (JBLU).
Stocks Attracting High Options Volume
The options pits were busy as well. Keurig Dr Pepper (KDP) and ON Semiconductor (ON) were on the radar, before the two join the SPX later this month. Another chip name that saw unusually high options activity was Advanced Micro Devices (AMD), while electric vehicle (EV) concern Nio (NIO) saw double the amount of options normally traded after earnings. Upbeat Covid-19 booster news from Moderna (MRNA) also made waves in the options pits, while options bulls blasted Western Digital (WDC) on news that the company was evaluating strategic alternatives to increase value for long-term shareholders.
Fed Statement in Focus Next Week
All eyes will be on the Federal Reserve next week, which will release a
key statement, alongside its projections. A host of indexes that will give clues into the economy are on tap as well, including the producer price index (PPI), as well as the import price, empire state manufacturing, and National Association of Home Builders (NAHB) home builders indexes. The earnings docket looks bare, but Adobe (ADBE),
Kroger (KR), and Oracle (ORCL) are still set to report. In the meantime, check this signal that may be indicative of a
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