It's hard for investors to focus on specific stocks, let alone know what to buy or sell, when volatility is so high and market moves often happen suddenly. That uncertainty is likely to hover over markets in the first few weeks of the new year unless there are some clear signs of improvement in the worsening macro environment.
Among the major worries pressuring the Dow Jones Industrial Average and S&P 500—which are both on pace to close the worst month for each since February 2009—are the speed at which the Federal Reserve hikes interest rates, the US-China trade war that could trigger a major global slowdown, and the US government shutdown that seems like it might linger into January.
With those macro uncertainties already in place to potentially move markets in the coming week, the following three stocks will likely garner additional investor scrutiny, a result of company-specific news.
1. Facebook
Mark Zuckerberg had an especially tough year in 2018, as did his company's stock. His credibility as one of Wall Street's most admired CEOs came under question, and the valuation of the company he founded, Facebook (NASDAQ:FB), plunged.
In his final post for 2018, Zuckerberg tried to calm investor nerves by saying Facebook is now a different company and well positioned to reclaim its credibility.
“We’ve fundamentally altered our DNA to focus more on preventing harm in all our services,” he wrote in the post. Along with a list of measures the social media giant has taken to make its platform more reliable and acceptable for the general public, regulators, and US politicians, Zuckerberg said Facebook automatically takes down 99% of terrorist content before anyone even reports it.
He also highlighted a new tool that will soon allow users to clear the browsing history connected with their Facebook profile. This would mean users would no longer be linked to the apps and websites they visited off of the social network, providing at least some measure of privacy.
It should be interesting to see if this helps alter investors' perception of the stock in the early weeks of 2019. To date, Facebook shares have lost about a quarter of their value since their midyear high, amid privacy scandals and reports of political manipulation from outside actors. Shares fell again on Friday, to close down 1% at $133.28.
2. Tesla
As part of the terms of its settlement with the Securities and Exchange Commission (SEC) in September, Tesla (NASDAQ:TSLA) is adding two new directors to its board. The move is meant to prove that the company is putting in place additional oversight of Elon Musk in his role as CEO.
Larry Ellison, the Chairman of Oracle (NYSE:ORCL), who co-founded the company in 1977 and has built it into a business-software giant, is one of the new directors. The second is Kathleen Wilson-Thompson, global chief of human resources for Walgreens Boots Alliance (NASDAQ:WBA).
Shares of Tesla have rallied impressively during the past quarter, surging 32% since mid-October. This stock is on pace to finish the year in the green after the equity experienced massive volatility on concerns that founder Elon Musk was losing control of this electric car manufacturing company. Among the many controversies stoked by Musk during 2018: a botched attempt to take Tesla private that triggered the Securities and Exchange Commission (SEC) probe; accusing a diver in the Thai cave rescue of being a child molester without any supporting evidence; appearing on a podcast while visibly smoking pot.
On the other hand, investor optimism on the stock stemmed from the company’s improving cash flows. In its Q3 earnings call, Tesla reported positive free cash flow for the first time. It also said it had ramped up Model 3 production.
The addition of the two new directors to its board, for a total 10 active members, may pacify regulators. Ideally, over the next few weeks it will also shift investor focus away from Musk's shenanigans and toward the company’s actual business.
3. Wells Fargo
On Friday, Wells Fargo (NYSE:WFC) announced that it has agreed to pay $575 million to all 50 states as well as the District of Columbia to settle claims related to its fake-account scandal which dates back as far as 2002, but became public in September 2016. This latest news is probably one of the biggest signs there's likely even worse buried behind the diversified lender's retail banking misdeeds, which included improper sales practices as well as managers instructing employees to open millions of bogus accounts using real customer names without their knowledge. As well, the lender was responsible for improper auto loan and mortgage practices that actively harmed customers.
All of this, along with the wide-spread probes that resulted, have kept Wells Fargo shares under pressure for years. Over the course of 2018, the stock underperformed, falling about 30% compared to the 11% slide for the benchmark iShares US Financials ETF (NYSE:IYF).
To date, the bank has paid out more than $4 billion in settlements and fines since the news broke in September 2016.