On Wednesday, stocks fell on a broad front, led lower by financial stocks and the tense international situation. The Dow Jones Industrial Average fell 0.3%, the S&P 500 fell 0.4%, the Nasdaq lost 0.5%, and the Russell 2000 dropped 1.3%.
Defensive sectors of the S&P 500 rose: Utilities gained 0.6%, consumer staples gained 0.2% and telecommunications gained 0.1%, while healthcare was up 0.05%.
Stocks were holding until late in the session when President Donald Trump said that the dollar “is getting too strong” and that he would prefer that the Federal Reserve keep interest rates low. Those comments created a sell-off in the bank stocks. The KBW Nasdaq Bank Index fell 1.1%, according to The Wall Street Journal. The president also said that he was undecided on re-nominating Fed Chair Janet Yellen.
Gold extended its recent gain: Gold (June) closed at $1,288.90 per ounce, up $14.70 — its highest closing fix since November.
At the close, the Dow Jones Industrial Average fell 59 points at 20,592, the S&P 500 closed at 2,345, down 9 points, the Nasdaq fell 31 at 5,836, and the Russell 2000 closed at 1,359, off 18 points. The NYSE’s primary exchange traded 766 million shares with total volume of 3.2 billion shares. The Nasdaq crossed 1.6 billion shares. On the Big Board, decliners outpaced advancers by 2.2-to-1, and on the Nasdaq, decliners led by 2.3-to-1. Blocks on the NYSE fell slightly to 5,999 compared to 6,238 on Tuesday.
The charts of the two most followed indices, the S&P 500 and the Dow Jones, show similar patterns. Both closed below the heralded support of their respective 50-day moving averages, but volume was low, and breadth is relatively narrow at just over 2-to-1.
Conclusion: Neither volume nor breadth confirms a breakdown, despite the two major indices closing below their respective 50-day moving averages. And yesterday, both closed above the bullish support line that defines the current chart pattern, a triangle.
Continue to sell high P/E stocks with big gains, but be prepared to put some cash to work in stocks that show potential. The energy sector shows many undervalued stocks like our Trade of the Day, Diamondback Energy Inc (NASDAQ:FANG).
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.
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