The markets started strongly this week before pulling back, as we saw the NASDAQ fall for four consecutive days. Tech stocks Amazon, Salesforce and Shopify took advantage of the retreat to carve out new handles on their bases and provide lower buy points, with other companies such as Apple and Microsoft expected to follow suit. A mixed set of corporate earnings reports has done little to improve sentiments with several of the big banks releasing less-than-expected results with Wells Fargo (WFC) seeing a decline in profit and Bank of America posting a drop in revenue and weaker sales than peers JPMorgan Chase (JPM) and Citigroup (C). The news for the big banks was not all bad, however, as Goldman Sachs broke from this trend and delivered profit that doubled last year’s figures off the back of strong fixed-income trading and asset management revenue.
Last Week’s Top Five Market Winners
Nasdaq Stock Market (NASDAQ)
- Data security stock Cloudflare made gains of 25% this week after announcing its new zero trust business security offering, Cloudflare One.
- Andersons posted another great week, making gains of 18.05% as the stock continued to bounce back.
- Shares in Chinese e-scooter company NIU Technologies once again saw gains this week (18%) after the company released promising sales figures for its third quarter.
- Solar panel producer Flex had a strong showing this week (gaining 16.39%) after the successful IPO of competitor Array Technologies increased interest in one of their subsidiaries, NEXtracker.
- Bed Bath and Beyond had more good results this week, growing 15.73% off the back of the company’s success in restructuring and building a strong online presence.
New York Stock Exchange (NYSE)
- Car rental company Hertz saw an insane 127% gain this week as the bankrupt company secured interim funding of $1.65B to continue operations as it goes through insolvency.
- Jumia Technologies gained 46.91% this week after short sellers, namely Citron Research pivoted their opinion of the stock to a buy.
- Oasis Petroleum had a positive run this week of 38.66% as its strategic move to bankruptcy in order to reduce debt was well received by investors.
- EV manufacturer Nio saw its price rise by 32.65% after strong sales and growth figures increased the already significant interest around the Chinese company.
- Vipshop, a Chinese discount retailer was another strong performer this week, gaining 24.36% with no significant company centric news released this week.
Last Week’s Top Five Market Losers
Nasdaq Stock Market (NASDAQ)
- Gossamer Bio saw a downturn this week of -26.67% after results from two clinical studies did not meet its primary endpoint goals.
- Struggling electric truck startup Nikola had a rough week as its continued unresolved negotiations with General Motors saw the stock drop -20.57%.
- Pharma company Vertex took a hit this week of -19.21% after it announced that it would no longer be testing its proposed protein deficiency drug.
- Investors moved away from retail stock Fossil Inc. as it plunged -15.06% this week after a weak quarterly performance.
- Restaurant chain Del Taco dropped this week by -13.16% even though Q3 results provided better-than- expected sales growth. Investors remained cautious regarding the continued effect of COVID on restaurants.
New York Stock Exchange (NYSE)
- Fastly Inc. continued to take a beating off the back of Thursday’s disappointing preliminary Q3 report, dropping by 33.11% for the week.
- Aurora Cannabis was down by 19.72% this week as an oversupply of cannabis in Canada led to the price of its product dropping by 30%.
- Cruise ship line Royal Caribbean dropped 17.25% this week off the back of the company, increasing liquidity with a billion dollars in stock and debt offerings as well as poor showings for the cruise line sector.
- Delek Holdings saw a dip this week of -13.70% as investors continued to question the future of the company’s stock.
- Norweigan Cruise Line Holdings went down by 13.51% this week as continued scrutiny of the cruise line industry left analysts and investors alike with no clear view of what to expect.
Highlights and Lowlights
Amazon and Shopify take advantage of market shifts the form handles
With several tech stocks forming handles this week and more expected as the market goes forward, investors are left to question whether this represents a possible breakout opportunity or whether this is simply the beginning of a larger pullback. Only time will tell, but there will be a lot of insights to be gained over how these stocks perform in the future.
Tesla production ramps up, earning due this week
As the company shows signs that it will start shipping its entry level offering, the model 3 from its Shanghai plant to the European market, investors will be watching the scheduled earnings report very closely. Will the reduction in production costs from the Chinese factory result in higher earnings or is this just another sign that Tesla is struggling to penetrate the Chinese market itself?
Election continues to divide market
Despite holding a commanding lead in the polls, no one knows for certain if Joe Biden will be victorious next month. Recent history has taught us that anything can happen on election day. After all, Hillary Clinton was all but declared the winner before Trump won the presidency. Historically, when elections were close, markets rallied in the following months. However, with so many other technical and fundamental factors impacting price movements this year, there is no way of even trying to predict if this will be the case this year. The race is Trump vs. Biden, however, when it comes to the way in which Wall Street behaves, COVID-19, China, big tech and bubble fears also have a vote.
What Is in Store for the Market This Week?
With Nancy Pelosi announcing a deadline for the coronavirus stimulus package, the market has reached a turning point. If no accord is reached, there will be no stimulus package before the election, something that could keep the markets from pushing through to record highs. This headline-driven market is expected to continue with any news regarding either the stimulus or the continued pursuit of a vaccine. Developments regarding either could heavily affect the direction the markets will swing going forward into the next week and beyond.
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