Although this year's Santa Claus rally was smaller than normal, stocks still made plenty of noise, with major U.S. equity benchmarks surging to record levels despite President Trump going nuclear on Twitter. In fact, this domestic strength helped fuel a global stock market rally. The S&P 500 Index (SPX) and Nasdaq Composite (IXIC) are both pacing for their best weekly performances in over a year, and the Dow Jones Industrial Average (DJI) is set for a big win as well, extending its lead atop the newly printed 25,000 level. On the other hand, the CBOE Volatility Index (VIX) remains stuck in single-digit territory, flirting with its lowest weekly finish since early November.
The first trading week of 2018 began with a flurry of analyst notes. Brokerages adjusted their outlooks on several high-profile stocks, including blue chips McDonald's (MCD) and Johnson & Johnson (JNJ). Others are calling for record highs from these three Dow components, and SunTrust Robinson thinks tax reform will result in tailwinds for restaurant stocks like Shake Shack (SHAK) -- but maybe not this sector peer, that surged on blockchain news.
Tech giants Oracle (ORCL) and IBM stock also enjoyed bullish analyst attention, which was just the beginning of what would be a huge week for the entire sector. One analyst even declared "Netflix has won" versus the competition, and another suggested ad buyers were flocking to Instagram over Snapchat.
One of the bigger storylines of the week was the discovery of a security flaw in Intel's chips. However, Intel stock seemingly found chart support after a brief pullback that had traders rushing for AMD options. Although AMD stock had a strong week, it may be a better idea to buy NVDA options. Apple (AAPL) was effected, too, yet luckily for recent call buyers, AAPL shares barely budged.
Outside of tech, the healthcare sector was another big reason the Nasdaq hit record highs this week. Valeant stock was again in focus, with the company getting a court date with Bill Ackman. Meanwhile, gene editing stocks were all the rage early in the week, and even beaten-down Teva shares enjoyed some positive attention from Wall Street. TESARO (TSRO), on the other hand, got buried by two price-target cuts. Options traders may now want to consider red-hot SAGE Therapeutics (SAGE) or even blue chip Pfizer (PFE).
Most auto stocks ended the week with impressive gains, thanks to upbeat 2017 sales figures. Shares of Tesla (TSLA) are set to close the week higher despite Model 3 production issues, while a self-driving technology deal boosted BlackBerry (BB). Even auto parts retailers got in on the action, after Barclays upgraded its opinion on the retail sector.
Staying on retail for a moment, rumors that Amazon will buy Target lifted shares of the latter, and Ross Stores (ROST) could be a stock to buy. Meanwhile, a holiday sales update sank J C Penney (JCP), Macy's (M), and Barnes & Noble (BKS).
Based on historical data, the huge move higher for U.S. stocks this past week could be a sign of even more favorable returns throughout 2018 -- though stock buyers may need to be patient. Despite this, many traders have decided to go long on commodities like gold and oil, with the latter trading at three-year highs. Things are only going to heat up next week on Wall Street, with fourth-quarter earnings season ready to commence.