On Thursday, stocks started from the gate with a round of profit-taking that by late morning resulted in a fall of more than 130 points for the Dow Jones Industrial Average. But by the close the senior index made back two-thirds of the early losses, closing lower by 0.2%, while the S&P 500 fell 0.1%. The Nasdaq Composite quietly gained 0.2%, setting a new closing high by a fraction of a point.
The financial sector, industrials, materials and energy led the decline, off 1.0%, 0.4%, 0.3%, and 0.3%, respectively. Energy’s retreat occurred despite a rise in WTI crude oil, which ended the day up 0.9% at $53.87 per barrel. Gold (January delivery) rose 1.4% to $1,179.70 per ounce, and the dollar fell after skeptical Federal Reserve comments regarding the impact of President-elect Donald Trump’s programs were released from the Fed’s December minutes.
Investors also appeared reluctant to take positions prior to Friday’s December jobs report. Both Macy’s Inc (NYSE:M) and Kohl’s Corporation (NYSE:KSS) said that holiday results were less than expected, and job cuts were likely.
At the close, the Dow Jones was off 43 points at 19,899, the S&P 500 fell 2 points at 2,269 the Nasdaq gained 11, closing at 5,488, and the Russell 2000 closed at 1,372, down 16 points.
The New York Stock Exchange’s primary exchange traded 926 million shares with total volume of 3.7 billion shares. The Nasdaq crossed 1.8 billion shares. On the Big Board, decliners outpaced advancers by 1.2-to-1, and on the Nasdaq, decliners led by 1.5-to-1. Blocks increased by a fraction from Wednesday’s total of about 6,500.
While attention still focuses on the two major indices, the DJIA and the 500, the Nasdaq quietly moved to a new closing high, retained high volume, and now threatens to set a new absolute high. The bull channel begun with the break from the 5,300 line in November has support at about 5,400, and the recently forming “V” tells us that all is well with the small caps.
Conclusion
The failure of the major indices to break out is said to be due to “uncertainty” that Mr. Trump’s policies will help the economy. In my opinion, that’s an example of very shallow reasoning since the new president has not even outlined his economic plan in detail.
The mild selling is, I believe, merely more group rotation due in part to profit-taking in a year in which lower taxes are anticipated. Ride the bull and buy the good-quality stocks in the groups that appear to benefit most from the new president’s growth message. I’ve focused on several steel companies that should thrive.
Next week I’ll focus on another industry that could profit from a rehab of the federal government’s spending.
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.
