Stocks enjoyed another buying surge on Tuesday, with investors turning away from geopolitical concerns to concentrate on the flow of Q1 earnings results. And they’ve been good. Helping push the major averages over their 50-day moving averages, something that hasn’t happened since March 21 or earlier.
In the end, the Dow Jones Industrial Average gained 0.9%, the S&P 500 gained 1.1%, the Nasdaq Composite gained 1.7% and the Russell 2000 gained 1.1%. Gold fell slightly. The dollar was mixed. Crude oil inched higher. And Treasury bonds fell.
The earnings-related headlines focused on results from Netflix, Inc. (NASDAQ:NFLX), Goldman Sachs Group Inc (NYSE:GS), Johnson & Johnson (NYSE:JNJ) and UnitedHealth Group Inc (NYSE:UNH). All reported better-than-expected results. NFLX blasted 9.2% higher to a new record high after smashing its subscribers growth estimates and raising guidance. UNH gained 3.6%, but GS and JNJ shares fell 1.7% and 0.9%, respectively.
The decline in Goldman Sachs continues a trend of selloffs for the big banks despite reporting solid results. The list includes JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Co (NYSE:WFC) and Bank of America Corp (NYSE:BAC). Financial stocks, one of the most heavily weighted areas of the market, finished with a 0.1% loss.
Volume was also light, with just 720 million shares trading on the NYSE vs. the 50-day average of 936 million.
Checking in with the team at SentimenTrader, they note that the last time the Dow Jones crossed above its 50-day moving average within four months of a bull market correction was in 2000 and 2007 as the last two bull markets were ending. Across a broader time frame, the results were more or less random with a relatively poor risk vs. reward balance.
The silver lining — at the risk of being self evident — is that as long as the Dow Jones stays above the 50-day threshold history suggests things should be good: Since 1900, the Dow has averaged an annualized gain of 11.7% vs. a 0.8% loss when below the 50-day.
Check out Serge Berger’s Trade of the Day for April 18.
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.