Stocks advanced slightly on Thursday on average volume and volatility. Fear that today’s jobs report may not live up to expectations appeared to keep a lid on any major advance.
The Dow Jones Industrial Average rose 0.5%, the S&P 500 gained 0.2% and the Nasdaq advanced 0.1%. The modest gains were made despite an initial jobless claims report that was slightly higher than economists forecasted. This was also the third time in the past four weeks that claims have risen.
The trend of the year’s most beleaguered stocks advancing continued. The materials sector rose 2.9%, industrials were up 1.7% and financials gained 0.9%. The latter was led by JPMorgan Chase & Co. (JPM) and Wells Fargo & Co (WFC), each up more than 1%.
A dovish tone was suggested by Fed Governor Lael Brainard, who told The Wall Street Journal, “Recent developments reinforce the case for watchful waiting.”
The Bank of England seemed to be listening, leaving rates unchanged. England’s central bank also lowered its growth forecasts for the U.K. economy, causing the U.S. dollar to gain 0.1% against the pound to $1.4590. The euro jumped 1% against the greenback to $1.1211.
Oil fell 1.7% to $31.72 a barrel, and gold rose 1.2% to $1,156 an ounce.
At Thursday’s close, the Dow Jones Industrial Average gained 80 points at 16,417, the S&P 500 rose 3 points to 1,915, the Nasdaq added 5 points at 4,510 and the Russell 2000 was up 4 points at 1,015.
The NYSE Composite’s primary exchange traded 1.2 billion shares with total volume of 5.1 billion. The Nasdaq crossed 2.2 billion shares. On the Big Board, advancers outpaced decliners by 1.7-to-1, and on the Nasdaq, advancers were ahead by 1.5-to-1. Block trades on the NYSE rose to 6,276, up from 5,908 on Wednesday.
There is usually a block of trades at the close of each trading session. However, they are usually offsetting. Block buyers have now shown up on the close for two successive days — a bullish sign.
I haven’t reviewed the Dow Jones Transportation Average recently, but Thursday’s break from a “V” bottom compels attention. It was accompanied by several days of higher-than-average volume, giving credence to the break. The next target for the index is its 50-day moving average at 7,351.
Conclusion
Block buying and the avoidance of what could have been a disaster on the Dow Jones Transportation Average are positive signs that the bottoms at S&P 500 1,885 and Dow 16,000 will hold.
These are signs, though, and not strong signals. So my strategy is to sell into strength, especially at key numbers, and buy into weakness. This is a trader’s market, but long-term investors might do well with oversold sectors like airlines, banks and utilities. But only buy on pullbacks; I wouldn’t chase anything.
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.
