Inauguration Week Marked by Record Highs
There were plenty of earnings reports to unpack throughout the week
Coming off last week’s losses, it has been a positive holiday-shortened week for the major indexes. Tuesday started off strong with upbeat bank earnings, as well as optimism regarding further stimulus and a faster vaccine rollout. The United States Presidential Inauguration of Joe Biden arrived before we knew it, highlighting a very busy Wednesday. All three major indexes scored new intraday highs as well as record closes, as a slew of upbeat earnings boosted the market. Furthermore, Wall Street’s “fear gauge” — the CBOE Volatility Index — registered its biggest drop in nearly two weeks.
Thursday brought earnings from several Big Tech names, and all three benchmarks once again hit fresh intraday highs. By the end of the day, the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) left the faltering Dow Jones Industrial Average (DJI) behind to nab even more record closing highs. Still on track for weekly wins, stocks pulled back today amid doubts over Biden‘s Covid-19 rescue plan.
Earnings Season Highlights Dow Stocks
Despite the shortened week, the headlines were jam-packed with blue-chip earnings. To start, Goldman Sachs (GS) announced a wildly upbeat fourth-quarter earnings report, though the stock shifted lower after comments by the CEO. Travelers Companies (TRV) stock hit an annual high ahead of its quarterly report, which came out on Thursday.
On the earnings docket next week is Microsoft ((MSFT)), and it looks like option traders are ramping up their activity ahead of the event. Today, two stocks in particular are dragging the blue-chip index lower. Intel (INTC) and IBM (IBM) both plummeted after their quarterly reports.
Solar Stocks Making Moves
Solar stocks have enjoyed the spotlight lately, and will likely remain on investors’ radars alongside the renewable energy sector. One stock in particular, First Solar (FSLR), pulled back to a bull signal which could bring it closer to its recent nine-year highs. Meanwhile, Morgan Stanley initiated coverage on Solaredge Technologies (SEDG) with an “overweight” rating, and price target of $354. The firm called the company a “world leader in the solar photovoltaic inverter market” — which is what converts solar energy into usable currents.
First Month of 2021 to End With a Bang
Plenty of earnings are on deck for next week, as well as a slew of economic data. The Federal Housing Finance Agency (FHFA) home price index, amongst other notable indexes are due out on Tuesday. Midweek, there will be a press conference with Federal Reserve Chairman Jerome Powell, and another fresh batch of jobless data is due out. A plethora of data is slated for Friday, including the latest Chicago Purchasing Managers’ Index (PMI). In the meantime, take a look at how contrarians should handle extreme market optimism, according to Schaeffer’s Senior Quantitative Analyst Rocky White.