On Wednesday, the Dow Jones Industrial Average fell farther from its coveted target — the index’s 20,000 line.
The decline wasn’t much, just 0.1%, but takes the index almost 200 points from its near-term target.
The decline in the Dow was primarily due to a drop of 0.6% in the stock of Goldman Sachs Group Inc (NYSE:GS) and UnitedHealth Group Inc (NYSE:UNH). While the Dow fell, the S&P 500 rose 0.2%, and the Nasdaq gained 0.3%. But the financial stocks were under pressure after a strong rise since mid-November made them vulnerable to sales and earnings failures, and Citigroup Inc (NYSE:C) provided that with a large miss in revenues. The stock fell 1.7%.
However, UnitedHealth fell 1.8% in one day following a 56% increase in profits powered by its Optum health services division. This decline was attributed to profit-taking in what is considered by some to be an “overpriced” stock market.
Energy shares in the 500 fell 0.3%, with WTI (U.S. crude oil) down 2.7% to $51.08 per barrel over worries that a stronger dollar and rising shale production could offset the plans of major producers to cut supplies. The U.S. Dollar Index closed 0.9% higher, and gold closed down 0.1% at $1,212 per ounce.
At the close the Dow Jones Industrial Average fell 22 points at 19,805, the S&P 500 gained 4 at 2,272, the Nasdaq rose 17 points to close at 5,556, and the Russell 2000 closed at 1,359 for a gain of 6 points. The NYSE’s primary exchange traded 768 million shares with a total of 3.3 billion shares traded. The Nasdaq crossed 1.7 billion shares. On the Big Board, advancers outpaced decliners by 1.2-to-1, and on the Nasdaq, advancers led by 1.3-to-1. Blocks on the NYSE fell to 6,077 vs 6,737 on Tuesday.
The flag formation, noted on the Dec. 28 DTA, was “extending its tail on declining volume,” and that is generally not a good signal. However, as we entered the new year, volume expanded, supporting a temporary move above the 20-day moving average. Yesterday, though not obvious, the Dow Jones Transportation Average’s intraday low came close to the 50-day moving average at 9,011, but reversed closing higher for the day by 41 points.
Conclusion: In my opinion, the stock market is taking a breather following six weeks of rallying after the election. The DJT is predicting a revival in economic activity, and that means higher stock prices.
We may, however, have to wait for the other sectors and indices to catch up with the economically predictive Dow transports.
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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