Bargain hunters roamed Wall Street on Tuesday, grabbing up some of the year’s most beaten-down stocks. As The Wall Street Journal noted, seven of the day’s top 10 S&P 500 performers were down by double-digit percentages this year. The result was a broad-based rally that lifted the index to a 1% gain for the year.
Oil and natural gas producers were high on the list of winners with Chesapeake Energy Corporation (CHK) up 12.5% and CONSOL Energy Inc. (CNX) gaining 4.7%. WTI crude ended the day up 2.9% at $37.87 a barrel.
Volume was light due to many traders taking off during the holiday week, resulting in high volatility. This favored technology stocks, which gained 1.4%. Apple Inc. (AAPL), Alphabet Inc (GOOGL, GOOG) and Facebook Inc (FB) led, each up between 1.3% and 1.8%.
Biotech stocks, which have been beaten down in the second half of the year, rallied with iShares NASDAQ Biotechnology Index (ETF) (IBB) gaining 1.8%. Monday’s Trade of the Day Gilead Sciences, Inc. (GILD) rose 1.7%.
The euro fell 0.1% versus the U.S. dollar at $1.0969. Gold rose 0.2% to $1,070.40 an ounce, and the yield on the 10-year Treasury note rose to 2.31%, up from 2.23% on Monday.
At Tuesday’s close, the Dow Jones Industrial Average gained 193 points at 17,721, the S&P 500 rose 22 points to 2,078, the Nasdaq jumped 67 points to 5,108, and the Russell 2000 advanced 12 points at 1,161.
The NYSE Composite’s primary market traded 590 million shares with total volume of 2.5 billion. The Nasdaq crossed 1.4 billion shares. On the Big Board, advancers outpaced decliners by 2.8-to-1, and on the Nasdaq, advancers led by 2.3-to-1. Block trades on the NYSE increased to 3,919, up from 3,778 on Monday.
A typically volatile day with very low volume, characteristic of holiday weeks, failed to punch the big caps to a breakout. In fact, the S&P 500 failed to close above the important resistance line at 2,080. However, it did manage to close over the 50-day moving average at 2,066 and the important 200-day moving average at 2,061.
Most of Tuesday’s attention was focused on big-cap stocks. Compared to the S&P 500, the SPDR S&P MidCap 400 ETF (MDY) made little progress. It wasn’t even able to approach the band of resistance at the 50-day and 200-day moving averages that form a band of resistance from $261 to $268.
Conclusion
As noted, bargain hunting was the “play of the day,” and it was focused primarily on the well-known, beaten-down, highly visible big-cap names.
With volume at very low levels, it is unlikely the major indices have the ability to smash through the overhead. If a big breakout occurs, it is likely to be delayed until January, but opportunities exist for traders and bargain hunters, especially in the technology and biotech sectors.
Will the traditional rush of IRA and other retirement contributions poke the major indices to new highs? Perhaps next week’s reaction to “new money” will provide the key to the market’s future in 2016.
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.
