The S&P 500 climbed to a new intraday and closing high on Wednesday, led by technology and biotech stocks. But instead of a blast through the old high, the index meandered for most of the day and only inched forward at the closing bell.
The health care sector ended with the biggest gains, with Biogen Idec (BGEN) jumping 11.2% on better-than-expected earnings, and Puma Biotechnology (PBYI) up nearly 300% following positive trial results. Intuitive Surgical (ISRG) rose 17.7% after exceeding expectations. iShares Nasdaq Biotechnology (IBB) was up 2.2%.
At Wednesday’s close, the Dow Jones Industrial Average was off 27 points at 17,087, the S&P 500 rose 3 points to a new high at 1,987, the Nasdaq was up 18 points at 4,474, and the Russell 2000 rose 2 points to 1,158.
Volume on the primary market of the NYSE was light at just 570 million shares, and total volume was reported at 2.9 billion shares. The Nasdaq traded a total of 1.9 billion shares. Advancers outpaced decliners on the Big Board by 1.4-to-1, and on the Nasdaq, there were slightly more decliners than advancers.
Most of technicians’ attention was focused on the S&P 500, since it broke to new closing and intraday highs. (I covered the index in yesterday’s Daily Market Outlook.) But the strength of the Russell 2000 should not be overlooked.
Following a close below its 200-day moving average on July 17 — a technical development that often leads to a major correction — the Russell 2000 has shown remarkable resilience.
By closing solidly above its 50-day moving average at 1,155, it confirmed that the reversal from the 200-day on a gap was no fluke. MACD is arching up and should support a successful attack on the next target — the 20-day moving average at 1,172.
A typical sluggish summer market with low volume and mediocre breadth has nevertheless provided enough momentum for the S&P 500 to move to new highs. And prior to that bullish development, a new Dow Theory buy signal was generated on July 16, when both the industrials and transports hit a new closing high.
These developments have occurred under the most trying of circumstances. If investors could put aside their fear of the stock market and buy quality stocks at current levels, they could still reap the rewards that are bound to come before the end of this year.
My 2014 target for the S&P 500 is 2,200-plus, and I see the Dow hitting 17,779 before year end.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.