On Monday, the price of crude oil fell 3.8%, dragging the Dow Jones Industrial Average farther from the 20,000 barrier due to declines in Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX). Other indices, like the S&P 500, also fell (-0.4%) from losses in its energy sector, which includes Southwestern Energy Company (NYSE:SWN) (-4.9%), Range Resources Corp. (NYSE:RRC) (-4.3%) and Devon Energy Corp (NYSE:DVN) (-4.3%).
The factor taking energy stocks lower was the price of crude oil, which fell to $51.96 per barrel for the February WTI contract. The decline was the largest in a month and was the result of “an unrelenting wave of oil from Iraq and Iran.” (Wall Street Journal)
Eight of the S&P 500’s eleven sectors ended in the red. However, the Nasdaq gained 0.2% due to its large representation in the technology stocks. The iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB) rose 1.4% on gains from Amgen, Inc. (NASDAQ:AMGN), Biogen Inc (NASDAQ:BIIB) and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), which all gained between 1.3% and 4.3%.
At the close, the Dow Jones Industrial Average fell 76 points at 19,887, the S&P 500 lost 8 at 2,269, the Nasdaq gained 11points to close at 5,532 and the Russell 2000 fell to 1,357 for a loss of 10 points. The NYSE’s primary exchange traded 769 million shares with total volume of 3.2 billion shares. The Nasdaq crossed 1.9 billion shares. On the Big Board, decliners outpaced advancers by 1.8-to-1, and on the Nasdaq, decliners led by 1.4-to-1. Blocks on the NYSE fell to 5,870 from 5,988 on Friday.
The Nasdaq was almost unheralded as it broke to a new closing high at 5,531.82. The junior index has jumped almost 30% from its February low, and yet on Monday most investors were focused on the Dow and its attempt to overcome the 20,000 line.
Traders recognize the similarity between our Trade Of The Day, the PowerShares QQQ Trust (ETF) (NASDAQ:QQQ), and the Nasdaq because of the large number of technology stocks on the Nasdaq. Roughly 70% of all stocks on the Naz are pure or partial tech.
Conclusion: Traders should focus on what is moving — technology. And if they want to participate in the highly charged nature of that sector, but want diversification, they should own the ETF, QQQ. This group is most often referred to by our readers as the “soldiers” as compared to the “generals,” which is the DJIA. Last year the soldiers led, and there is every reason, because of their roughly 20% growth rate, that they will lead again in 2017.
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.