U.S. equities continued their climb on Tuesday, but laggards became leaders as technology stocks enjoyed a relief rally. Meanwhile, the stocks that led the way higher over the past week — industrials, materials and financials — took a breather.
In the end, the Dow Jones Industrial Average gained 0.3%, the S&P 500 added 0.8%, the Nasdaq Composite gained 1.1% and the Russell 2000 finished the day 0.3% higher.
Treasury bonds were stronger (also a reversal of recent trends), the dollar was higher, gold gained 0.2% and crude oil rallied 5.8% — the best one-day gain since April — as OPEC once again teased a possible supply freeze agreement. Specifically, there is chatter that Russia will meet with OPEC officials in Doha this week for “informal discussions” alongside Saudi Arabia, Iran and others.
All this is ahead of a OPEC technical committee meeting in Vienna on Nov. 21-22 to hammer out the details of the rough production ceiling agreement from last month.
No surprise then that energy stocks led the way with a 2.7% gain. Yield-sensitive sectors enjoyed a relief rally as well, with telecoms up 2.1% and utilities up 1.7%. Technology stocks rose 1.3% with Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) up 2.9% and Apple Inc. (NASDAQ:AAPL) up 1.3%. Financials gained just a fraction.
Airline stocks took flight, with United Continental Holdings Inc (NYSE:UAL) up 5%, American Airlines Group Inc (NYSE:AAL) up 3.2%, and Southwest Airlines Co (NYSE:LUV) up 2% after Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B) disclosed stakes. Chinese online retailer JD.Com Inc(ADR) (NASDAQ:JD) rose 11.4% on stronger-than-expected third-quarter results on a 38% rise in revenues and strong forward guidance.
Dick’s Sporting Goods Inc (NYSE:DKS) fell 6.9% on weaker-than-expected margins and tepid forward guidance. Nokia Corp (ADR) (NYSE:NOK) fell 4.2% on weak guidance and a downgrade from analysts at Bank of America Merrill Lynch.
On the economic front, retail sales surprised to the upside pointing to underlying strength in the economy. Sales rose 0.8% in October from September, beating expectations for a 0.6% gain. The number was boosted by a 1.1% gain in auto sales, a 2.2% jump in gasoline sales and a 1.1% rise in building material sales. Core retail sales gained 0.8%, the largest increase since April and double the consensus estimate.
The data firmed up expectations for a December interest rate hike from the Federal Reserve, with futures market odds of a tightening now at nearly 91% (vs. 86% on Monday). All eyes are on Federal Reserve Board Chair Janet Yellen’s testimony to Congress on Thursday.
Edge subscribers are already enjoying a nearly 3% gain in their new ProShares Ultra Crude Oil (NYSEARCA:UCO) position as energy prices look ready for an extended run higher.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
