Volatile Week Led by Inflation Data, Fed Buzz

Chip stocks have been in the news as well

Key inflation data and the U.S. Federal Reserve’s meeting minutes for September made Wall Street particularly volatile this week. The Nasdaq Composite Index (IXIC) slipped to its worst level since September 2020, after new regulations that limited U.S. companies’ ability to sell semiconductors and related equipment to China. What’s more, JPMorgan Chase (JPM) CEO Jamie Dimon warned the U.S. could soon slip into a recession.

Stocks continued to fall as the consumer price index (CPI) and producer price index (PPI) for September came in hotter than anticipated. The Dow Jones Industrial Average (DJI) capped its losing streak at four sessions, though both the S&P 500 Index (SPX) and Nasdaq went on to mark six days in the red. Stocks staged a big bounce towards the end of the week, as investors appeared to speculate on inflation hitting its peak, and the central bank noted it is open to mitigating the risk of negative economic impact. The Dow quickly cooled from its best day since November 2020, however, as inflation expectations and lackluster retail sales data weighed. At the time of this writing, the Dow was eyeing a weekly win, but the Nasdaq and SPX were headed for losses.

Chip Stocks Making Headlines

The chip sector was in focus this week, after the Biden’s administration move to restrict semiconductor sales to China. Taiwan Semiconductor Manufacturing (TSM) slipped to a two-year low, but Wedbush reiterated its “outperform” rating, citing a strong relationship with Apple (AAPL). Meanwhile, Applied Materials (AMAT) brushed off seven price-target cuts, as well as a net sales warning. Now seems like a good time to take advantage of ON Semiconductor’s (ON) dip, too, after the security pulled back to a long-term bullish trendline. 

What Analysts Are Saying

Analyst calls kept investors plenty busy as well. Ford Motor (F) and General Motors (GM) kicked off the week with downgrades, as UBS aimed at a “deteriorating” auto sector. Elsewhere, Kraft Heinz (KHC) enjoyed an upgrade thanks to reduced private label exposure, and Mizuho praised Toast’s (TOST) “delicious path to profitability.”  Netflix’s (NFLX) ad-supported tier also attracted positive analyst attention, and Piper Sandler upgraded Lululemon Athletica (LULU), noting the incoming winter could lead to outerwear outperformance.

The brokerage bunch also didn’t miss the opportunity to chime in ahead of earnings, with PNC Financial (PNC) and Lockheed Martin (LMT) attracting bear notes before their respective reports. Elsewhere, DocuSign (DOCU) saw a rare upgrade, and two other analysts turned bullish on Snowflake (SNOW) despite recent struggles. Lastly, Warner Music Group (WMG) fell to record lows, brushing off a Goldman Sachs bull note.

Blue Chips Set to Heat Up Earnings Season

The earnings season picks up next week, with multiple blue-chip stocks set to step into the confessional, including American Express (AXP), Goldman Sachs (GS), IBM (IBM), Johnson & Johnson (JNJ), Procter & Gamble (PG), and Verizon (VZ). Wall Street will also have housing data and the central bank’s Beige Book to unpack. Until then, see which ETF is a reliable market indicator, and understand why investors should be skeptical of ralliesright now.