The Dow Jones Industrial Average Doesn’t Bounce Off Its Worst Day of 2017

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On Wednesday, stocks recovered following the worst day overall since October. The gains were led by the technology sector, which in many cases reversed following their worst day of the year on Tuesday.

However, despite the tech rebound, the blue chips lagged pulling the Dow Jones Industrial Average down less than 0.1%. Nike Inc (NYSE:NKE), a Dow component, fell 7.1%, pulled lower by a lackluster outlook for sales growth.

The technology sector of the S&P 500 rose 0.8%, its biggest gain in three weeks. The Nasdaq, which is tech heavy, rose 0.5%, and the 500 jumped chiefly on gains by technology giants Microsoft Corporation (NASDAQ:MSFT), up 1.3%, Apple Inc. (NASDAQ:AAPL), up 1.1%, and Facebook Inc (NASDAQ:FB), up 1.1%. The PHLX Semiconductor Index (NASDAQ:SOXX) did its part by gaining 1.1%.

Crude oil (WTI) fell 0.4% as data showed that stockpiles of crude hit a new record high. Spot WTI closed at $48.04 per barrel for a fall of 11% so far in March.

At the close, the Dow Jones Industrial Average fell 7 points at 20,661, the S&P 500 rose 4 to 2,348, the Nasdaq gained 28 points to close at 5,822, and the Russell 2000 fell a point to 1,346. The NYSE ‘s primary exchange traded 899 million shares with total volume of 3.5 billion shares, and the Nasdaq crossed 1.8 billion shares. On the Big Board, advancers exceeded decliners by 1.1-to-1, and on the Nasdaq, decliners led by 1.3-to-1. Blocks on the NYSE fell to 6,935 from 7,804 on Tuesday.


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The Dow Jones Industrial Average Can't Bounce Off Its Worst Day of 2017

On Monday I presented a chart of the defensive Dow Jones Utility Average, noting the “buyers in December, the start of what we can now clearly see is a bullish “V” formation. On Friday buyers chased the attractive yields of this sector, triggering a ‘Golden Cross’ (long-term bullish signal) and setting the stage for an attack on the July ’16 high at over 723.” That attack on the July high took on new vigor yesterday when the index broke through the resistance line at 703, completing a breakout from a small “V” formation.

Conclusion: Although much was made yesterday of the gains in technology and financial stocks, the real story was the cautious outlook as investors continued to search for defensive holdings. Thus the advance on the high of the Dow Jones Utility Average at 723. Yesterday’s break from a small “V” at 703 puts the old high just 20 points above last night’s close.

This, I think, is telling us that Tuesday’s decline, the steepest since October, has replaced optimism with fear. Investors will seek safer, high-yielding investments as the shift from “risk-on” to “risk-off” proceeds.

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.

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