Short Week Turns Rocky as Inflation Woes Ramp Up

Though the week was a short one, with markets closed on Friday for the holiday, Wall Street still had a lot to unpack by way of economic data and the start of earnings season. Stocks got off to a bumpy start on Monday, after a spike in the 10-year Treasury yield weighed heavily on the major indexes, sending both the Nasdaq and Dow to triple digit losses. The much anticipated consumer price index (CPI) reading was released on Tuesday, hitting its highest level since 1981, and topping analysts' expectations. While stocks initially rose amid speculation that this could be the peak for inflation, all three indexes eventually settled with more steep losses, marking a third-consecutive drop for both the S&P 500 and the Nasdaq. 

By midweek, earnings reports began trickling in, specifically from several major bank names. While a lackluster post-earnings performance from JPMorgan Chase (JPM) did little to boost the Dow, the broader market wound up catching some tailwinds from Delta Airlines (DAL) on Wednesday, which predicted a return to profit this quarter during its turn in the earnings confessional. As a result, stocks settled with notable gains, with the S&P 500 and Nasdaq both snapping a three-day losing streak. Thursday afternoon, however, saw both of these indexes move back below their respective breakeven levels. The Dow, meanwhile, got a bit of a boost from Goldman Sachs' impressive earnings report, but as of this writing, all three indexes were headed for weekly losses. 

Stocks Analysts Eyed This Week 

Amid all this market volatility and upcoming earnings reports, the brokerage bunch has been busy. In fact, Wells Fargo (WFC) received an upgrade from Citigroup to "buy" from "neutral" ahead of its quarterly release. Several other names weren't as lucky, including Dow member Cisco (CSCO), which was downgraded to "sell" by Citi, while Nvidia (NVDA) hit with a downgrade to "neutral" from Baird. Earlier in the week. PayPal (PYPL) was also targeted, suffering a price-target cut at the hands of Susquehanna after its CFO was tapped by Walmart (WMT). And while it seems like many analysts are stepping away from tech, IBM (IBM) was called a "place to hide" as economic risks ramp up. 

Look to the Past Before Considering These Stocks

This week, we broke down a few bigger names running into historically significant trendlines on the charts, which traders might want to consider before taking a bullish (or bearish) stance. A few stocks that have already seen strong performances in 2022, and might be ready to climb even higher, include Callon Petroleum (CPE) and Bloom Energy (BE). Meanwhile, Macy's (M) just ran up to a trendline that's put pressure on the stock in the past. 

Here's What Investors Should Focus on Next 

And speaking of looking to the past, Schaeffer's Senior Quantitative Analyst Rocky White just pointed out that the S&P 500 hasn't gone this long since hitting a record high since 2018. Investors might be interested as to when we can expect the index to finally turn around. For even more clues on what past volatility has meant for markets, and how traders can apply that to their own portfolios going forward, Schaeffer's V.P. of Research Todd Salamone applies the old adage "history may not repeat itself, but it does rhyme" to Wall Street's current situation. 

In the meantime, traders can expect another full week of economic activity and earnings reports next week. On tap will be housing and building data, jobless claim updates and the purchasing managers' indexes (PMI). Highlighting a busy week for earnings will be American Airlines (AAL), Anthem (ANTM), AT&T (T), Bank of America (BAC), Charles Schwab (SCHW), Johnson & Johnson (JNJ), Lockheed Martin (LMT), Procter & Gamble (PG), Tesla (TSLA), and Verizon (VZ), just to name a few.