Stocks were stuck in neutral at the start of the week, as Wall Street digested a slew of M&A developments. The Dow Jones Industrial Average (DJIA), Nasdaq Composite (IXIC), and S&P 500 Index (SPX) managed to notch fresh record highs nonetheless, with the Dow extending its daily win streak to seven on Wednesday, thanks in part to a sharp rise in oil prices. However, worry began to creep into the markets late in the week, as investors responded to reports the Senate's tax proposal could delay corporate tax cuts until 2019. The news sent all three indexes spiraling, with stocks set to close the week in the red at the time of this writing.
The week's M&A buzz began in the semiconductor sector, with Broadcom (AVGO) offering to buy QUALCOMM (QCOM) for $103 billion. This began what would be an intense week for the sector, as traders also digested news of a pact between AMD and Intel meant to fight Nvidia (NVDA). But the latter stock had the last laugh, rallying to record highs on Friday thanks to another strong earnings release.
In the options pits, skepticism is seemingly picking up on chip stocks -- and the tech sector as a whole -- based on recent activity surrounding the VanEck Vectors Semiconductor ETF (SMH). Options bears might want to stay away from Micron (MU) and this other underloved chip stock, as both look ready to push higher.
Another sector that was in focus all week was retail, with heavyweights Kohl's (KSS), J C Penney (JCP), and Macy's (M) all releasing their quarterly reports. Plus, Sears stock hit another record low after earnings, and analysts pounded these other three retail stocks.
The sector could stay at the forefront going forward with Black Friday coming, which could be a great sign for Best Buy stock. Meanwhile, options traders are expecting another earnings breakout for ANF stock, but it could e-commerce giants Amazon.com and Alibaba that steal the show once again.
Plenty of other stocks made huge moves after earnings. Most notably, Wall Street newcomer Roku (ROKU) exploded after its inaugural earnings release, while shares of Snapchat parent SNAP sold off, continuing their streak of dismal post-earnings reactions. Also making a sizable move was Oprah favorite Weight Watchers (WTW), and Match Group stock soared after earnings, too. Take-Two Interactive (TTWO) was another earnings winner, but options bulls may want to consider this other video game stock going forward.
Turning to healthcare, Valeant Pharmaceuticals (VRX) delivered a big post-earnings move to shareholders, unlike these three sector peers. Outside of earnings, SAGE Therapeutics stock was a huge winner thanks to upbeat drug data, which also provided a lift to this other biotech stock. Elsewhere, analysts expect TherapeuticsMD (TXMD) to quintuple.
Even though the so-called Santa Claus rally may have come early this year and the we're entering the most bullish six-month period of the year for the stock market -- but that may not help blue chip Caterpillar (CAT) or this defense stock. Looking ahead, this unprecedented year for stocks will continue with earnings from Dow components Home Depot and Walmart. And even if volatility stays muted around these events, there's an options trading strategy that can help you profit.