Stocks closed with modest gains Wednesday after Federal Reserve minutes showed that the governors were divided over the timing of a rate increase. The Dow industrials rose 0.2%, the S&P 500 gained 0.3%, and the Nasdaq outperformed by jumping 0.8%.
The Nasdaq’s advance was helped by biotech stocks with the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) gaining 3%. However, Apple Inc. (NASDAQ:AAPL) fell 0.3% following a downgrade to “hold” from “buy” by analysts at Societe Generale.
The S&P 500 was negatively impacted by the energy sector, which suffered its biggest loss in two months after it was reported that weekly crude supplies had their largest increase in 14 years. Light, sweet crude for May delivery fell 6.6% to $50.42 a barrel.
Gold for June delivery fell to $1,198.10 an ounce, down 1%. And the euro fell 0.3%, closing at $1.078.
At Wednesday’s close, the Dow Jones Industrial Average gained 27 points at 17,903, the S&P 500 rose 6 points to 2,082, the Nasdaq jumped 41 points to 4,951, and the Russell 2000 was up 9 points at 1,263.
The NYSE’s primary market traded 765 million shares with total volume of 3.2 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, advancers outpaced decliners by 1.5-to-1, and on the Nasdaq, advancers led by 1.8-to-1.
The Nasdaq was the top-performing index Wednesday, continuing the recent pattern of domestic stocks outperforming the global giants.
The index is getting support from its uptrending 50-day moving average at 4,881 while continuing to be range-bound from 4,815 to 5,009. Support is provided by the band at 4,566 to 4,815 and the 200-day moving average at 4,633.
MACD is looking mildly better, hooking up but still a day or so away from a buy signal, provided daily tape action remains strong for the mid and small caps.
Q1 earnings for S&P 500 companies are expected to decline 4.6%, according to FactSet. If this occurs, it will be the first year-over-year decline since Q3 2012. But there are some projected gainers, including financial stocks, health care and industrials. Energy earnings are expected to decline 64%, with utilities and materials down, as well.
The way to invest is to go after the surprises, like energy stocks, which after Wednesday’s decline could be fully discounting a big cut in earnings. And in other sectors, like utilities, the bar is now so low that it wouldn’t take much to exceed the forecasts while obtaining higher-than-average yields.
After Wednesday’s close, Alcoa Inc (NYSE:AA) reported Q1 earnings of $0.28 per shares versus an expected $0.26. But revenues of $5.82 billion missed expectations of $5.94 billion.
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.