It's been a rocky ride, but the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) should extend their weekly win streaks to a seventh week, as traders cheer relatively strong third-quarter earnings reports from several big-cap companies -- particularly in the tech sector. Meanwhile, the Nasdaq Composite (IXIC) is pacing for its best session in over a year, and should pull in its fifth consecutive weekly win,even as biotech stocks struggled amid dismal earnings and Amazon's (AMZN) acquisition of pharmacy licenses. All three indexes touched fresh record highs this week.
On the economic front, hopes for tax reform surged with Thursday's narrowly passed budget in the House. President Trump also reportedly narrowed his choices for the next Fed chair to Governor Jerome Powell and Stanford economist John Taylor, the latter rumored to be the favored pick among Republican senators. In turn, Treasury yields rose to a seven-month high. New home sales and durable goods orders also rose unexpectedly, and third-quarter gross domestic product (GDP) rose at a faster-than-predicted pace.
Impressive third-quarter earnings helped a number of big-name stocks climb the charts this week. Shares of 3M (MMM), Caterpillar (CAT), General Motors (GM), Twitter (TWTR), and Ford Motor (F) rocketed higher after earnings, but tech stocks were the real superstars. Alphabet (GOOGL) hit an earnings-fueled record high, while Intel (INTC) touched a fresh 17-year high. Microsoft (MSFT) and Amazonalso joined the club. However, Boeing (BA), Chipotle Mexican Grill (CMG), and Advanced Micro Devices (AMD) were among the companies that issued lackluster earnings results.
Retail stocks made headlines again this week. J C Penney (JCP) stock dropped to a fresh record low after the company slashed its 2017 profit and revenue guidance. Dismal earnings sent HNI (HNI) and Whirlpool (WHR) stocks lower, too, with the latter also reacting to the retailer's breakup with Sears over a pricing dispute. Meanwhile, the Toys 'R' Us bankruptcy continues to shock the toy stocks. Hasbro (HAS) stock dipped after warning of weak holiday sales, and Mattel (MAT) shares fell after the firm reported earnings and suspended its dividend. One retailer bucking the trend, however, was Overstock.com (OSTK), which recently hit a 12-year high and could be due for a short squeeze.
A pair of rare market signals flashed this week, which could tell stock traders what to expect. First, it's been a banner year for inverse volatility trackers, and the CBOE Market Volatility Index (VIX) -- or Wall Street's "fear gauge" -- premium crested above 200% on Monday, which hashappened only four other times since 1990 -- and in 2016, it meant bad news for the VIX. Meanwhile, last week's Investor Intelligence (II) poll pointed to higher optimism among investors, sending up this sentiment signal not seen in 30 years.
Earnings season continues full speed ahead next week, with FAANG stocks Apple (AAPL) and Facebook (FB) slated to release results. Traders will also turn their attention to the Federal Open Market Committee's (FOMC) two-day policy-setting meeting, which kicks off on Tuesday, and the October jobs report will be in focus on Friday. Plus, Wednesday signals the start of November, which could mean good news for these 25 stocks and bad news for these stocks and sectors.