The Dow Jones Industrial Average (DJIA), S&P 500 (SPX), and Nasdaq Composite (IXIC) all chalked up new record highs this week, with the Dow closing above the 23,000 mark for the first time ever on Wednesday -- its best day in a month -- thanks to impressive earnings from IBM. Tax reform hopes helped the Dow and SPX extend their win streaks to a sixth day on Friday, after the Senate passed a budget plan.
Also in focus this week was the University of Michigan's consumer sentiment index, and the National Association of Investment Managers (NAAIM) survey -- with the latter pointing to bigger stock gains in the near term.
Thursday, Oct. 19 marked the 30th anniversary of Black Monday, the infamous stock market crash of 1987. While the DIJA managed to erase a triple-digit deficit to eke out a small gain, and the SPX clawed its way to a record close, a pullback in tech stocks dragged the IXIC down yesterday. Superstitious buyers may want to continue practicing caution, however, as Monday, Oct. 23 could mean even worse news for the stock market. Lucky for nervous traders, options hedging offers protection against a potential crash or downside.
While Dow concerns like Johnson & Johnson (JNJ), Travelers (TRV), and Verizon (VZ) enjoyed positive third-quarter earnings reactions, some blue chips took a hit this week. Shares of General Electric (GE) dropped after earnings, with the stock spiraling to a two-year low. Meanwhile, Chevron (CVX) garnered two downgrades on valuation concerns, and Nike (NKE) received a downgrade in light of a slowdown in China. To top it off, Apple (AAPL) experienced its worst day in two years amid iPhone 8 demand worries and Apple Watch connectivity issues -- which, in turn, sparked a decline for Apple suppliers.
Drug stocks, on the other hand, climbed the charts this week. Positive reactions from the U.S. Food and Drug Administration (FDA) sent Cara Therapeutics (CARA) and Gilead Sciences (GILD) soaring. Meanwhile, upbeat drug data propelled shares of Spectrum Pharmaceuticals (SPPI) to a 15-year high. Plus, a number of biotech stocks flashed potential "buy" signals this week, including shares of Juno Therapeutics (JUNO). The Health Care Select Sector SPDR Fund (XLV) also broke its three-session losing steak after a new bill to reinstate federal subsidiaries to health insurers was introduced in Congress.
It wasn't an all-out win for drug stocks this week, though. Shares of Celgene (CELG) dipped after the company said it will not continue testing of its Crohn's disease treatment.
Amazon announced its latest partnership on Tuesday, this time with Garmin to launch Garmin Speak, a navigation device that will incorporate Amazon's virtual assistant Alexa. And while Garmin shares enjoyed a small boost from this news, other stocks aren't faring as well amid Amazon's market expansion. United Natural Foods (UNFI), for example, received a downgrade and price-target cut from RBC on concerns over the company's contract with Whole Foods, now a subsidiary of Amazon. Meanwhile, one analyst thinks Amazon's expansion in retail is "overblown," claiming it won't impact Lululemon Athletica (LULU).
Investors are also speculating whether or not the online ecommerce giant will start accepting direct bitcoin payments, a decision traders think could be revealed in the company's earnings report next Thursday.
Traders will digest another round of quarterly earnings from a slew of blue-chip companies, like Exxon Mobil (XOM), McDonald's (MCD), and Intel (INTC) -- one of the most overbought stocks right now. FAANG stocks Alphabet (GOOGL) and Amazon are also expected to release earnings next week. Plus, the advance reading on gross domestic product (GDP) is slated for release next Friday, which will give traders a glimpse into third-quarter growth.