Stocks continued their rally Wednesday as the Dow Jones Industrial Average and S&P 500 moved to new highs. This appears to indicate investors feel U.S. stocks are relatively valuable compared to other global equities.
The advance, however, was confined to the blue-chip indices. The Nasdaq fell 0.3% and the Russell 2000 lost 0.4%. And defensive sectors were better performers than more aggressive ones.
Consumer discretionary stocks fell 0.5%. Michaels Companies Inc (NASDAQ:MIK) dropped 6.1% after the company cut guidance and said it would sell shares to raise capital. Amazon.com, Inc. (NASDAQ:AMZN) fell 0.8% following Tuesday’s “Prime Day” sale.
The Dow Jones Transportation Average rallied 0.7% with component CSX Corporation (NASDAQ:CSX) jumping 4.4% after beating analysts’ estimates.
At Wednesday’s close, the Dow Jones Industrial Average gained 24 points at 18,372, the S&P 500 was slightly higher at 2,152, the Nasdaq fell 17 points at 5,006, and the Russell 2000 lost 5 points at 1,201.
The NYSE Composite’s primary exchange traded 837 million shares with total volume of 3.5 billion. The Nasdaq crossed 1.6 billion shares. On the Big Board, decliners outpaced advancers by a slight margin, and on the Nasdaq, decliners led by 1.4-to-1. Block trades on the NYSE fell to 5,188 from 6,117 on Tuesday.
The Nasdaq broke from the trading range at 4,715 to 4,960 on Monday with a gap up to the Wednesday’s intraday high 5,036. The resistance line at 4,960 now becomes a support line.
The next target is the head-and-shoulders cluster formed between October and the December break at 4,960. The high of the pattern is at 5,177, while the all-time high is at 5,232, made in July 2015.
In over 50 years of investing, I have never seen a stock market so determined to overcome obstacles. It has climbed a wall of worry like no other.
Even though U.S. stocks appear to being bought because they offer the best value out of a host of poor global values, low volume didn’t support the move higher. However, momentum pushed volume with three days of 9.1-to-1 up versus down volume and one of 15-to-1 day on the NYSE this month.
Will the buying last? Only if U.S. corporate earnings continue to be superior to other countries. Therefore, earnings that exceed forecasts should lead to new highs, including a break through the Nasdaq’s old high at 5,232.
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.