On Wednesday, the major indices cut their winning streak to four sessions as tear gas and Molotov cocktails blanketed Greece’s Syntagma Square. Anti-austerity protesters accused their leaders of making a deal they could not tolerate.
Despite the dramatic TV coverage, stocks closed slightly lower with the Dow Jones Industrial Average down just 0.02% and the S&P 500 falling only 0.1%. Even the more volatile indices, like the Nasdaq and Russell 2000, were hit for only 0.1% and 0.7%, respectively.
Financial stocks rose 0.8% as a result of better-than-expected earnings from Bank of America Corp (BAC) and JPMorgan Chase & Co. (JPM). PNC Financial Services Group Inc and U.S. Bancorp (USB) also gained on their earnings reports.
Biotech stocks continued their advance. The iShares NASDAQ Biotechnology Index (ETF) (IBB) closed 0.7% higher, but had been up as much as 2.3% earlier in the day. The sector was boosted by a 7% jump in Celgene Corporation (CELG) after the announcement of a major acquisition and an increase in its annual earnings guidance.
Delta Air Lines, Inc. (DAL) reported better-than-expected earnings as a result of lower fuel costs, and its stock gained 0.8%.
Federal Reserve Chair Janet Yellen’s remarks before Congress put additional pressure on stock prices. She said the central bank was on a path to raise short-term interest rates this year. However, she added that the increase was conditional upon continuing economic strength.
The yield on the 10-year Treasury note fell to 2.35%, down from 2.40% on Tuesday. Crude oil fell 3.1% to close at $51.41 a barrel. And gold futures lost 0.53% at $1,147.20 an ounce.
At Wednesday’s close, the Dow Jones Industrial Average fell 3 points to 18,050, the S&P 500 dropped 2 points to 2,107, the Nasdaq lost 6 points at 5,099, and the Russell 2000 was down 9 points at 1,265.
The NYSE’s primary market traded 769 million shares with total volume of 3.3 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 1.5-to-1, and on the Nasdaq, decliners led by 1.8-to-1.
The iShares Russell 2000 Index (ETF) (IWM) clearly held above its May low, making a solid bottom with a buy signal from my proprietary indicator, the Collins-Bollinger Reversal (CBR), in early July, and then closing above its 50-day moving average.
This reversal will likely be confirmed by a new CBR buy signal. The decline in sellers is also a positive. The next attack should be against the resistance line at $127.50
The SPDR S&P MidCap 400 ETF (MDY) is not quite as positive as its cousin IWM. However, it received a MACD buy on Tuesday, and volume confirms the breakout.
I’d feel more comfortable with a bullish posture on this ETF if it would hop above the 50-day moving average, now at $277, which was also Wednesday’s high.
Conclusion
The market’s resilience is impressive in the face of riots in Greece and a deal with Iran that its sponsors know will receive a “spirited” debate.
As the saying goes, “One swallow does not make a spring.” Maybe so, but this market looks like it’s ready to fly again.
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.
