On Wednesday, consumer stocks pushed the indices higher as each closed just under the session’s high, and the Dow Jones Industrial Average closed a mere 56 points from the elusive 20,000 line.
Nine of the S&P 500’s eleven sectors gained with materials up 1.4% and consumer discretionary, which ended up 1.3%, leading for most of the session. Analysts supplied the catalyst for buyers with forecasts of higher corporate earnings in almost all industries.
Consumer discretionary stocks in the S&P 500 included some of the session’s biggest gainers that included General Motors Company (NYSE:GM), up 5.5%, and Ford Motor Company (NYSE:F), which gained 4.5%. Both auto makers released better-than-expected sales for December, but GM led with a 10% gain for the month over Ford, which increased sales by 0.1%.
The dollar retreated from its highest level on Tuesday, a level not reached since 2002. The dollar’s advance vs. a basket of 16 currencies has caused concern among economists that its advance could put a lid on profits of U.S. corporations selling products overseas.
Positive signs from OPEC nations that they would abide by agreed-upon production cuts and a report of higher Chinese economic data pushed WTI crude oil (February delivery) up 1.8% to $53.26 per barrel. Those gains were also viewed as positive for banks and oil producers.
At the close the Dow Jones Industrial Average gained 60 points, closing at 19,942, the S&P 500 gained 13 at 2,271, the Nasdaq rose 48 points at 5,477, and the Russell 2000 closed at 1,388 for a gain of 22 points. The NYSE’s primary exchange traded 945 million shares with total volume of 3.7 billion shares, and the Nasdaq crossed 1.9 billion shares. On the Big Board, advancers outpaced decliners by 5.6-to-1, and on the Nasdaq advancers led by 3.5-to-1. Blocks on the NYSE fell slightly to 6,496 from Tuesday’s total of 6,784.
While most of the commentary has focused on the Dow’s target at 20,000, the real story of a renewed advance is with the chart of the S&P 500. On the last day of the year, the S&P 500 cracked under the important support line and inflection point, at 2,250. That point was recovered and exceeded since Tuesday with consecutive advances. But 2,250 is still an important support line, and if it is broken again it could create a technical barrier that would be difficult to twice overcome.
Conclusion: Despite the Dow’s difficulty with the 20,000 line and uncertainties about the market’s reaction to the new president’s plans, the market action is still bullish. All we require to relieve the uncertainty is a sharp run-up on higher-than-average volume that will convince the naysayers that the start of the new year has been very bullish. “So goes the first week of January, so goes January, and so goes the year.” (Wall Street adage)
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.
