On Monday, stocks closed on a flat note as consolidations from the Trump rally rolled from Friday. However, while the Dow and S&P 500 stalled, the mid- and small-cap stocks continued last week’s advance.
The Russell 2000 and the S&P Mid-Cap 400 rose 1.3% and 1.6%, respectively, while the DJIA gained just 0.1% and the S&P 500 was unchanged. Shares of banks advanced while high-dividend stocks and bonds continued their post-election decline. Utilities and telecommunications led the declining sectors lower.
Technology stocks, a sector that had a 12% gain in the third quarter, also continued to decline, falling over 3% since Sept. 30. The president-elect is for tighter limits on trade and immigration, and that could make prices rise on lower-priced technology components.
At the close, the Dow Jones Industrial Average gained 21 points at 18,869, the S&P 500 fell slightly to 2,164, the Nasdaq lost 19 points at 5,218, and the Russell 2000 closed at 1,299 for a gain of 16 points. The NYSE’s primary exchange traded 1.2 billion shares with total volume of 5.3 billion shares. The Nasdaq crossed 2.3 billion shares. On the Big Board, advancers slightly exceeded decliners, and on the Nasdaq, advancers led by 1.4-to 1. Blocks on the NYSE rose to 6,927 from 6,344 on Friday.
The buck, as reflected in the exchange-traded fund PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP), continued to advance, and on Monday gapped through its bullish resistance line supported by the highest volume in many months. The gain is due to a view that the new administration will use its fiscal powers to push Treasury yields higher and thus the dollar higher.
This has a negative impact on some commodities, chiefly crude oil, which fell to $43.30 per barrel yesterday, though gold and silver declined as well. Gold closed yesterday at a five-month low.
Conclusion: Big-cap stocks, like our Trade of the Day, Netflix, Inc. (NASDAQ:NFLX), are getting very cheap. And while the obvious beneficiaries of the election, financials, have risen, they may be subject to profit-taking.
This presents some very good buying opportunities in high-quality stocks like International Business Machines Corp. (NASDAQ:IBM), Apple Inc. (NASDAQ:AAPL) and other blue-chip stocks. We will spend the remainder of this week highlighting quality equities with good trading potential.
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.
