Stocks jumped on the first day of the new trading month, led by the formerly lagging Nasdaq, which gained 1.5% for the day. And the Dow Jones Industrial Average, also a former laggard, added 0.9%, closing up slightly for the year.
The jump in U.S. stocks surprised some traders because of the fall in Asian markets overnight. China’s Shanghai Composite index lost 1.7%, and Japan’s Nikkei 225 fell 2.1%.
Energy stocks rose 2.3% with Chevron Corporation (CVX) and Exxon Mobil Corporation (XOM) leading, up 4.5% and 3.1%, respectively.
Biotechnology stocks rallied from the opening bell, with iShares NASDAQ Biotechnology Index (ETF) (IBB) gaining 3.9%.
All 10 sectors of the S&P 500 gained, but technology stocks (+0.9%), consumer staples (+0.6%) and consumer discretionary (+0.5%) rose less than the others.
Chipotle Mexican Grill, Inc. (CMG) fell 2.5% on news of an E. coli scare that caused the company to close 43 stores in the Pacific Northwest.
Crude oil prices fell because of the weakening economic picture in China. WTI oil was down 1% to $46.14 a barrel.
Gold lost 0.5% at $1,135.80 an ounce, and the yield on the 10-year Treasury note rose to 2.2%, up from 2.16% on Friday. The U.S. dollar was down slightly against the euro.
The Dow Jones Industrial Average rose 165 points to 17,829, the S&P 500 gained 25 points at 2,104, the Nasdaq jumped 73 points to 5,127, and the Russell 2000 was up 24 points at 1,186.
The NYSE Composite’s primary exchange traded 868 million shares with total volume of 3.7 billion. The Nasdaq crossed 1.9 billion shares. Advancers outpaced decliners on the Big Board by 4.2-to-1, and on the Nasdaq, advancers led by 3.5-to-1. Block trades on the NYSE fell to 4,840 from 6,068 on Friday.
SPDR S&P MidCap 400 ETF (MDY) jumped into the resistance zone from $262 to $265 to the 200-day moving average at $270. The 200-day is a strong inflection point, which has obvious significance if broached.
Like MDY, iShares Russell 2000 Index (ETF) (IWM) in a trading zone, which it is currently trading in the middle of. However, also like MDY, IWM is confronted by the formidable 200-day moving average, just below $121.
Conclusion
Both MDY and IWM have made impressive advances from their October lows, not to mention the spectacular rise from August’s debacle. However, average volume on the sell side and Monday’s paltry buying could indicate traders see the significance of the massive resistance at the 200-day moving averages.
Raymond James’ Chief Investment Strategist Jeff Saut’s prediction of a trading high early this week and then a mild correction could be on target.
Traders should focus on the short side as the two key ETFs approach resistance.
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.
