Republican Tax Plan Sends Stocks on Wild Ride
Stocks are mostly lower at the halfway point, with the release of the House's tax code proposal resulting in whipsaw price action. Specifically, the Dow Jones Industrial Average (DJIA), S&P 500 Index (SPX), and Nasdaq Composite (COMP) all fell sharply following the unveiling of the Republican tax plan, but have since pared some of those losses. The plan calls for a permanent corporate tax rate of 20%, and cuts the mortgage interest deduction in half -- news that's weighing on homebuilder stocks. In addition, poorly received earnings from Tesla (TSLA) and Facebook (FB) are further weighing down the Nasdaq. Meanwhile, investors are awaiting President Trump's choice for the next Fed Chair, with a decision expected this afternoon. Reports indicate Fed Governor Jerome Powell will be tapped to replace Janet Yellen.
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Buy calls on this online retail stock, if past is precedent. The drug stock getting destroyed after earnings. Plus, call volume accelerated on GE; a booming drug stock; and the tech name at the bottom of the Nasdaq.
Among the stocks with unusual options volume is blue chip General Electric Company (NYSE:GE), with calls trading at five times the expected pace. This is mostly due to one trader that seemingly sold to open 100,000 November 22 calls and bought to open an equivalent number of December 22 calls, apparently expecting GE stock to hold below $22 through front-month expiration on Friday, Nov. 17, but rebound into December expiration. At last check, the shares were trading down 1.3% at $19.77, touching a two-year low of $19.63 in the process.
One of the biggest gainers on the Nasdaq is drug stock Neurocrine Biosciences, Inc. (NASDAQ:NBIX), after the company's strong earnings release was met with bullish analyst attention. The shares were last seen 18.9% higher at $72.42, bringing their three-month gain to 49%. Earlier, NBIX stock hit an 11-year high of $72.83.
Meanwhile, chip stock IMPINJ Inc (NASDAQ:PI) is one of the biggest Nasdaq laggards, due to disappointing third-quarter earnings and ugly current-quarter guidance. The security is down 35.2% at $21.26, earning a spot on the short-sale restricted list, and earlier touching an annual low of $21.08.