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1 Stock To Buy, 1 To Dump When Markets Open: Amazon, Bank of America

By Investing.com (Jesse Cohen/Investing.com)Stock MarketsJun 20, 2021 08:02AM ET
www.investing.com/analysis/1-stock-to-buy-1-to-dump-when-markets-open-amazon-bank-of-america-200587137
1 Stock To Buy, 1 To Dump When Markets Open: Amazon, Bank of America
By Investing.com (Jesse Cohen/Investing.com)   |  Jun 20, 2021 08:02AM ET
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Stocks on Wall Street tumbled on Friday, with the Dow and S&P 500 suffering their worst week in months as worries whether the Federal Reserve could start raising rates sooner than expected spooked the market.  

The blue-chip Dow Jones Industrial Average posted a weekly loss of 3.5%—its biggest drop since October—as investors rotated out of value stocks. The benchmark S&P 500, meanwhile, fell 1.9%, its greatest weekly loss since February.

The NASDAQ Composite, performed less badly, losing just 0.3% over the same timeframe as the tech trade came back into favor.

This week, we'll have another batch of notable earnings reports from companies like Nike (NYSE:NKE), and FedEx (NYSE:FDX), as well as key Congressional testimony from Fed Chair Jerome Powell. It'll be a busy week ahead for Wall Street.  

Bucking any market trends this week, below we highlight one stock likely to be in demand and another which could see further downside. 

Remember though, our timeframe is just for the upcoming week.

Stock To Buy: Amazon 

This is a big week for Amazon.com (NASDAQ:AMZN), as it will kick off it's annual Prime Day shopping extravaganza—which is expected to be one of the biggest shopping events in history—at 3:00AM ET on Monday.  

The two-day event, which gives Prime members a chance to score incredible deals, will include discounts on more than two million items, according to the company.

While the e-commerce giant does not release official Prime Day sales figures, many are expecting online spending during this year’s event to eclipse last year’s total.

According to the digital research arm of software company Adobe, Amazon's 2021 Prime Day is forecast to rake in $11 billion, compared to sales of $10.4 billion during last year’s event, which occurred in October due to the COVID-19 pandemic.

Furthermore, 6 in 10 Americans surveyed told Adobe they plan to shop during Prime Day this year.

"We expect Prime Day this year will surpass the 2020 Cyber Monday levels" of spending, said Jason Woosley, vice president, commerce product and platform, at Adobe Experience Cloud. "It's a huge lift happening in the middle of June."

Amazon Daily Chart
Amazon Daily Chart

AMZN stock ended at $3,486.90 on Friday, less than 2% below its record high of $3,552.25 reached back in September.

With a valuation of $1.76 trillion, the Seattle, Washington-based e-commerce and cloud giant is the third most valuable company listed on the U.S. stock exchange, trailing only Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT).

That said, Amazon has been a relative laggard amongst the large-cap tech leaders this year, gaining only about 7% in 2021, as pandemic-era lockdown restrictions eased, and consumers flocked back to physical retail stores in greater numbers.

However, the stock has been trading incredibly well lately, rallying in seven of the past nine trading sessions, despite broader market volatility.

Despite worries over looming antitrust reform—the U.S. House Judiciary Committee plans to vote this week on a package of six antitrust bills targeting the market power of Big Tech—AMZN stock appears to be a safe bet this week, as investors move back into tech names at the expense of economy-linked stocks, such as industrials, materials, and financials.

Stock To Dump: Bank of America 

And speaking of financials, Bank of America (NYSE:BAC) shares look set to stay under pressure in the coming days as investors fret over the negative impact of the Federal Reserve’s policy update on the company’s bottom line.

Financial stocks of all sizes sold off last week after Federal Reserve officials signaled that interest rates will need to rise sooner and faster than they had previously anticipated due to soaring inflation.

The Fed’s hawkish shift unleashed a huge repositioning in global financial markets, including bonds.

The U.S. 10-year yield jumped to as high as 1.59% after the Fed’s update, but fell back down to around 1.44% by Friday afternoon, in the midst of worries over future economic growth prospects.

US 10-Yr Daily Chart
US 10-Yr Daily Chart

Lower interest rates hurt the return on interest that banks earn from their loan products, or net interest margin—the difference between the interest income generated by banks and the amount of interest paid out to their depositors.

Given the flurry of repositioning in the bond market, BAC stock looks like a vulnerable investment in the near term.

Bank of America Daily Chart
Bank of America Daily Chart

Bank of America has thrived throughout most of this year, reaping the benefits of a recovering economy, robust investment banking activity and narrowing credit loss exposure.

However, after rallying to its best level since March 2008 at $43.49 on June 3, BAC stock has since lost momentum, tumbling roughly 11% to close at $38.78 on Friday.

Despite recent losses, shares of the Charlotte, North Carolina-based lender have gained 28% in 2021.

At current levels, BofA has a market cap of roughly $332.3 billion, making it the second biggest U.S. banking institution, behind JPMorgan Chase (NYSE:JPM).

1 Stock To Buy, 1 To Dump When Markets Open: Amazon, Bank of America
 

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1 Stock To Buy, 1 To Dump When Markets Open: Amazon, Bank of America

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Comments (12)
Joseph Obrzut
jzut Jun 22, 2021 5:24PM ET
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I own 100 BAC at 11.15 since 2012. NO WAY.
Phil Kimmel
Phil Kimmel Jun 22, 2021 7:56AM ET
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Amazon up - ok. B of A fown - no way and no logic behing this recommendation.
Ronnie Fierro
Ronnie Fierro Jun 21, 2021 11:56PM ET
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Well this didnt age well
Molo Inc
Molo Inc Jun 21, 2021 2:47PM ET
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hello, BofA is here to support the economy..their services are not used adequately.. I'm always wanting to not end up broke since they switched names from Nations bank to BofA. I know there's money to put into future investment especially for retirement I just leave it alone don't bother looking into the brand and upgrade. I owe and don't have much ATM.
Tiktok Videos
Tiktok Videos Jun 21, 2021 5:32AM ET
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sir , i like you very much .and i am belong to med class femly so please help me in this earning .thanks so much from Atique.ur.Rehman
Ryan Kramarich
Ryan Kramarich Jun 20, 2021 9:54PM ET
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banks and DXY will certainly bounce at some point this week or at latest next week
Miles Mathewson
Miles Mathewson Jun 20, 2021 9:08PM ET
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Dump Bofa? Why? no way
Carlos GV
Carlos GV Jun 20, 2021 2:35PM ET
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money is moving from banks into tech companies...
Jonathan Nelson
Jonathan Nelson Jun 20, 2021 12:17PM ET
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You should keep in mind that when $DXY retraces, short term, off this bull run the financials will lead the rest of the market back up. This would have been sound advice two weeks ago. Rotation looks to favor tech after quad witching on Friday. Look for AMZN and AAPL help lead tech through Prime Day.
Luis Quezada
Luis Quezada Jun 20, 2021 12:16PM ET
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Why would banks sell off if interest rates will go up faster than expected?
Gustavo Gomez
Gustavo Gomez Jun 20, 2021 12:13PM ET
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Higher interest rates are good for banks, so the argument given here against BAC is the opposite.
Leon Kelly
Leon Kelly Jun 20, 2021 10:40AM ET
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AMZN will gap up to ATH then sell off with the rest.. no break out of consolidation until BEZOS announces split
 
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