On Friday, the uncertainties surrounding the French election, a group of positive earnings and the renewed possibility of a redone tax reform bill joined to offset what could have been a nasty decline. The Dow Jones Industrial Average fell 0.2% while the Nasdaq was down 0.1%, and the S&P 500 and the Russell 2000 each fell 0.3%.
A drop in the price of crude oil put pressure on stocks in general. Crude fell 2.1%, closing under $50 per barrel for the first time in weeks. The reason for the decline in crude was an unconfirmed report that Russia may not go along with cuts in production beyond June.
At the close on Friday, the Dow Jones Industrial Average fell 31 points to close at 20,548, the S&P 500 lost 7 at 2,349, the Nasdaq fell 6 at 5,911, and the Russell 2000 closed at 1,380 for a loss of 4 points. The NYSE’s primary exchange traded 927 million shares with total volume of 3.5 billion shares, and the Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 1.2-to-1, and on the Nasdaq, decliners led by 1.4-to-1. Blocks on the NYSE increased to 7,597 from 6,783 on Thursday.
On Thursday, both the iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) and SPDR S&P MidCap 400 ETF (NYSEARCA:MDY) — not shown — closed over their respective 50-day moving averages. On Friday the IWM held above the line while the MDY slipped a fraction below it.
Conclusion: Despite the slight slip of the MDY, both ETFs closed out the week above their respective trend lines.
Unfortunately, all indices are so geared to geopolitical news rather than earnings that it is difficult to make accurate forecasts regarding near-term stock movements.
However, all major indices are close to their highs, and each is in a long-term secular bull market. Thus, weakness should be used as an opportunity for investors to buy solid stocks with a history of dividend payments. Traders, however, must pay close attention to news items and trade trend lines and support zones, buying close to support lines with protective stop-loss orders in effect.
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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