Stocks jumped Tuesday following Monday’s flat performance. The key indices logged their biggest gains in almost two weeks with the Dow Jones Industrial Average up 1% and the S&P 500 up 1.1%.
Fueling the advance was anticipation of key economic data, including Friday’s job report, and this week’s European Central Bank (ECB) meeting. The ECB is expected to ease monetary policy again this week ahead of the Federal Reserve, which is expected to raise interest rates for the first time in over nine years at the FOMC meeting later this month.
However, the Institute for Supply Management’s manufacturing index fell to 48.6 in November, the lowest level since 2009. The consensus had expected 50.4. Some analysts noted this could cause the Fed to be cautious about raising rates.
Boeing Co (BA) rose 1.6% after Deutsche Bank said it expects the aerospace manufacturer to raise its dividend and announce a share repurchase plan.
The euro gained 0.7% against the U.S. dollar at $1.0634. Oil advanced 0.5% to $41.85 a barrel. Gold rose 0.2% to $1,063.80 an ounce.
At Tuesday’s close, the Dow Jones Industrial Average gained 168 points at 17,888, the S&P 500 rose 22 points to 2,103, the Nasdaq was up 48 points at 5,156, and the Russell 2000 gained 6 points at 1,204.
The NYSE Composite’s primary exchange traded just over 845 million shares with total volume of 3.7 billion. The Nasdaq crossed over 2 billion shares. On the Big Board, advancers outpaced decliners by 2.4-to-1, and on the Nasdaq, advancers led by 1.4-to-1.
While the small and mid caps struggle to break free of a narrow nine-month trading band, the same is true of the big caps. Tuesday’s triple-digit advance only represents a 1% gain — much smaller than a triple-digit gain 10 years ago.
Volume on the advance was not only below average but significantly less than Monday’s high downside volume. MACD is arching down.
Conclusion
The S&P 500 was touted for breaking 2,100, but while this round number may have psychological significance, there is no technical significance (see Nov. 24 Daily Market Outlook). Breadth has been consistently uninspiring, and volume lags across all markets.
Yes, semiconductor stocks broke out (see the Trade of the Day), but the semis alone can’t push the broader markets higher. Major sectors like oil, retail, technology, health care and transportation must get in gear if the major indices are to make a clean break.
These sectors did not receive significant buyer support Tuesday. But if the reaction to Fed policy is positive, Santa could provide the long awaited breakout before year end.
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.
