Nasdaq Outperforms Once Again as "Fear Gauge" Dips

Investors pored over earnings from Walmart and Home Depot

Deputy Editor
May 19, 2023 at 12:31 PM
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Despite a slow start to the week, stocks are eyeing comfortable five-day gains as Wall Street's "fear gauge," the Cboe Volatility Index (VIX), moves lower once again. On track to turn in a fourth consecutive weekly win, Big Tech helped the Nasdaq Composite Index (IXIC) once again outshine the Dow Jones Industrial Average (DJI) and S&P 500 Index (SPX). These gains came even as investors wrestle with the fact that U.S. lawmakers have yet to agree on negotiations concerning the debt ceiling, and pored over several blue-chip earnings reports.

Microsoft's Acquisition Seeing Signs of Life

There were plenty of headlines for investors to sift through, including news that Microsoft (MSFT) will be allowed to move forward with its acquisition of Activision Blizzard (ATVI). Micron (MU) plans to invest nearly $4 billion in extreme ultraviolet (EUV) technology in Japan, while EVgo (EVGO) announced a $125 million public offering of its Class A common stock. 

Tech stocks saw a midweek rally, with Netflix (NFLX) surging on news that its ad-supported tier saw about 5 million active users per month. Plus, Alibaba (BABA) announced it will list its cloud computing business next year, and Palantir (PLTR) was boosted by its CEO's confidence in the artificial intelligence (AI) market.

Billionaire investor Warren Buffett's Berkshire Hathaway (BRK) took a nearly $1 billion stake in Capital One Financial (COF), even amid the volatility in the banking sector. A New York Times report revealed, Qatar's Sheikh Jassim bin Hamad al-Thani improved his bid to buy Manchester United (MANU). Lastly, Blue Apron (APRN) will transfer its operational infrastructure, signing a non-binding letter of intent for up to $50 million. 

Blue Chip Earnings Steal the Show

More earnings reports trickled in this week, including a beat-and-raise from blue-chip retailer Walmart (WMT). Another Dow component, Home Depot (HD), reported a big quarterly miss, which weighed on sector peer Lowe's (LOW). Applied Materials (AMAT), meanwhile, brushed off its better-than-expected report -- as well as a slew of bull notes -- and pulled back after earnings. Elsewhere, web development concern Wix.com (WIX) and software publisher Monday.com (MNDY) both reported big top- and bottom line wins. Finally, C3.ai (AI) added to its already large 2023 lead, after reporting upbeat fiscal fourth-quarter preliminary results.

How Options Players Played the V-Shaped Rally

Leading up to Memorial Day, investors will have plenty of economic data and earnings reports to unpack. In the meantime, Schaeffer's Senior Quantitative Analyst Rocky White shows how options traders played the v-shaped rally, and Schaeffer's Senior V.P. of Research Todd Salamone notes an options bull signal sounding for the SPX.

 

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