Fed Fatigue Leads to Dull December Trading


Wall Street is on edge about the Fed’s upcoming interest rate decision

Resurgent Fed fears and subsequent recession anxieties kept a lid on any gains for most of the week. The Dow Jones Industrial Average (DJI) saw a massive tumble on Monday as a new crop of concerns over another outsized interest rate hike from the Federal Reserve gripped Wall Street once more. The Dow turned in another huge loss on Tuesday, while the Cboe Volatility Index (VIX) — Wall Street’s “fear gauge” — soared.

The blue-chip index saw a fake-out rally on Wednesday. The S&P 500 Index (SPX) and Nasdaq Composite (IXIC) joined in, with the former logging its fifth-straight daily loss. Stock futures tried to turn around some of that dim December trading on Thursday, and the S&P 500 did manage to snap its losing streak, while the Dow logged a modest win on the back of rising unemployment claims. This rally was short-lived, however, as Wall Street digested a hotter-than-anticipated wholesale inflation report. By midday Friday, all three major indexes were eyeing weekly losses

Top Analyst Calls This Week 

Amid all these broader-market headwinds, analysts had quite a bit to say about individual stocks. Starbucks (SBUX) was hit with a bear note, with Deutsche Bank  seeing little upside for the equity in the near-term. Deutsche Bank also struck a bearish tone on Conagra Brands (CAG), General Mills (GIS), and Molson Coors Beverage (TAP). Blue-chip Salesforce (CRM) is another stock facing near-term headwinds. 

On the flip side, JPMorgan Chase (JPM) and General Electric Company (GE) received lofty upgrades. December outperformer Estee Lauder (EL) was in the spotlight, too, thanks to a bull note from Deutsche Bank. Finally, on Friday, several brokerages were adjusting their price targets higher on Netflix (NFLX), due to its ad-supported tier. 

Where Options Traders Put Their Money 

Options traders also got busy this week, with plenty of stocks seeing high-volume activity. Several U.S.-listed Chinese stocks saw an uptick in activity following news that the country may begin to ease strict Covid-19 restrictions. GameStop (GME) was targeted by these traders ahead of earnings, while traders played VF Corp’s (VFC) selloff after a CEO resignation. A big corporate update from Southwest Airlines (LUV) had put traders blasting the stock. Bears targeted Beyond Meat (BYND) and Prometheus Biosciences (RXDX), too, while call traders were quick to rush toward Rocket Companies (RKT) as it rallied off its record lows.

Key Interest Rate Decision Out Next Week

The Fed releases its latest interest rate decision next week, and all eyes will be on Chairman Jerome Powell’s remarks afterward. More inflation indicators are on tap next week as well. The earnings calendar will feature the likes Accenture (ACN), Coupa Software (COUP), Darden Restaurants (DRI), Lennar (LEN), Oracle (ORCL), Weber (WEBR), and Winnebago (WGO) set to report. Investors should check out Senior Quantitative Analyst Rocky White’s explanation on the divergence between oil stocks and the price of oil. 



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