Fed Drama Engulfs First Week of November

Options traders were busy as the earnings season cracked on

Digital Content Manager
Nov 4, 2022 at 12:43 PM
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It was another wild week on Wall Street, with stocks finishing up the month of October on Monday with massive wins. In fact, the Dow Jones Industrial Average (DJI) logged its biggest one-month jump in over 45 years, even after a daily drop. November was off to a rocky start on Tuesday as traders eyed Wednesday's Federal Reserve rate hike decision. 

As expected, the central bank wound up raising interest rates by another 75 basis points. Stocks briefly jumped as some traders construed comments from the Fed as a signal that aggressive rate hikes would soon slow. However, Fed Chair Jerome Powell quickly put these theories to bed, promising more to come until inflation is back under control.

Stocks today could snap their recent slump, though. At the time of this writing, the Dow, S&P 500 Index (SPX), and the Nasdaq Composite Index (IXIC) are all higher following an upbeat jobs report for October. However, the three major benchmarks are set to log losing weeks. 

Which Stocks Look Promising Right Now 

There's a lot of doom and gloom on Wall Street, but it's not all bad news. Earlier this week, we highlighted Toast (TOST) as a potentially bullish play, while Starbucks (SBUX) stock has seasonality on its side. A few big names posted upbeat results for their latest quarterly reports as well, including Match (MTCH) and Etsy (ETSY). Goldman Sachs (GS) conquered a key trendline, and these three U.S.-listed Chinese stocks popped as reopening rumors surfaced.

Options Traders' Favorites This Week

Options players busy this week, as securities made wild moves as the earnings season cracked on. Bears blasted Peloton (PTON) and Cheesecake Factory (CAKE) after the companies issued disappointing quarterly results. Meanwhile, an upbeat earnings report from SoFi Technologies (SOFI) attracted bulls. Call traders also eyed Carvana (CVNA) and Pfizer (PFE) this week, while they pressed doubt on a selloff for GameStop (GME) stock.

Look Ahead to Disney Earnings and CPI Updates

Investors have a bevy of employment data to pore over next week. Consumer price index (CPI) updates are due out as well, in addition to a year-over-year comparison of the Federal budget. Plus, the earnings docket features results from AMC Entertainment (AMC), Beyond Meat (BYND), Take-Two Interactive (TTWO), Walt Disney (DIS), and Yeti (YETI). Meanwhile, traders are questioning while an "all-clear" signal is finally ahead, as they unpack how options bulls have benefited from Fed interest rate decisions in the past. 


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