Stocks on Wall Street closed out mixed on Friday as investors continued to weigh the impact of the recent hike in bond yields.
For this week, the blue chip and losers lost 0.5% and 0.8% respectively, ending their two-week win streak.
The Underperformers, with the tech-heavy index falling 0.8% in the same time frame to undergo its fourth negative week in five.
Meanwhile, government bond yields rose to a new 14-month high above 1.75% at one point on Thursday, only to retreat on Friday, finishing at around 1.73%. The reference rate started below 1% in 2021.
Dow, S&P 500, NASDAQ, 10-y Yield Daily Chart
Amid another series of notable earnings reports and important economic data – as well as the chief Congressional of Federal Reserve Chairman Jerome Powell – next week is expected to be another busy week on Wall Street.
Regardless of which direction the market is heading, below we highlight one stock that is likely to be in demand and another stock that could have even more downsides.
However, keep in mind that our timeframe is for the next week only.
Stock to Buy: FedEx
FedEx Corporation (NYSE 🙂 shares – which are just their third weekly profit in a row – have been on a rip recently and have February is up about 18% as investors pile into cyclical stocks likely to benefit from the reopening of the economy.
That trend is likely to continue in the coming week as more states across the country end lockdowns and ease stay-at-home measures, given the progress being made in the field of vaccines.
FDX shares – which are up 150% year-on-year – ended Friday at $ 279.58, not far from their all-time high of $ 305.59 reached December 9.
At current levels, the Memphis, Tennessee-based shipping giant has a market capitalization of approximately $ 69.8 billion.
Investor sentiment lifted last week as FedEx announced its fiscal third quarter and easily outperformed revenues, largely due to strong shipping volumes.
Earnings per share increased 146% from the same period last year to $ 3.47, far ahead of expectations for earnings per share of $ 3.30. Sales, meanwhile, were up 23% year-on-year to $ 21.5 billion, easily surpassing estimates for sales of $ 19.9 billion.
To add to those encouraging numbers, FedEx management also issued a bullish forecast for the full year – the first guideline it has issued since it suspended a year ago amid uncertainty surrounding the COVID-19 pandemic.
Chairman and CEO Fred Smith stated in the company's earnings statement:
"We expect demand for our unparalleled e-commerce and international express solutions to remain very high for the foreseeable future."
In addition, charting techniques are also looking promising after FDX stocks soared above their 50-day and 100-day moving averages (DMA) on Friday for the first time since late December.
FedEx 50-DMA, 100-DMA Daily Chart
The last time those major map levels were recovered in July 2020, FDX collected 125% over a five-month period.
Stock To Dump: Pinduoduo
After falling nearly 12% last week, Pinduoduo (NASDAQ 🙂 will remain behind as investors continue to worry about the negative impact of various factors plaguing Shanghai-based e-commerce. trade giant.
PDD shares ended Friday's session at $ 141.80, more than 33% below its all-time high of $ 212.30 reached on February 16, giving the Chinese e-commerce technology company a market cap of $ 173 , 9 billion.
Despite the recent sell-off, stocks are still up about 319% in the past 12 months as Chinese consumers changed their shopping habits online in the wake of the COVID-19 pandemic.
Sentiment in the burgeoning online marketplace took a hit last week after the shocking departure of founder and chairman, Colin Huang, China's third richest man with an estimated fortune of about $ 50 billion.
Chen Lei, who replaced Huang as CEO of PDD last July, will now assume the additional role of chairman of the company.
The surprising resignation of 41-year-old Huang comes amid increasing scrutiny by the Chinese authorities. As part of their investigation, authorities are cracking down on the country's internet sector, which is becoming increasingly powerful. This in an effort to curb tech giants that have successfully developed a dominant force in the consumer sector.
With 788 million annual active users, Pinduoduo has recently overtaken Alibaba (NYSE 🙂 as China's largest e-commerce platform.
Meanwhile, a weak technical picture is likely to weigh in after PDD shares closed below their 50DMA and 100DMA for the first time in more than five months on Friday.
PDD 50-DMA, 100-DMA Daily Chart
Many investors often view the 50 and 100 DMAs as effective indicators of the stock's short-term trend, with the price above indicating upward bias, and measures below indicating further weakness.
