The midday stock market rebound faded in the early afternoon, although the indices remained above the day’s lows.
X
The tech-heavy Nasdaq fell 1.6% after nearly erasing a 2% opening loss. The S&P 500 reversed higher, but around 1:30 p.m. ET was down 0.5%. The index climbed above the 50-day moving average, but dipped slightly below.
Small caps continued to outperform, with the Russell 2000 up 1.3%. It had climbed more than 2% previously. Volume increased on the Nasdaq and NYSE from the same time on Tuesday.
The Dow Jones Industrial Average gained 0.3%. In the Dow, Visa (V) provided some comfort with a nearly 4% gain after its quarterly report. The stock extended its move above the 50-day moving average.
Boeing (BA) rose more than 1% even as earnings beat expectations. The stock appeared to rise on General Electric(GE)’s bullish outlook for the aviation industry.
The yield on the 10-year Treasury fell 9 basis points to 4.2%, which could help the stock market. The Bank of Canada raised interest rates by 50 basis points today, not the 75 basis point hike expected by the markets.
New home sales fell to 603,000 in September, better than economists had expected.
Stock market bullish trend strengthens
The stock market had every reason to crash after the disappointing third quarter results of Alphabet (GOOGL) sent shares down 6%. A faint prospect of Microsoft (MSFT) triggered a major drop, sending the software and cloud giant down 5.2%. Yet indices have rebounded
The pair also accounted for much of the early decline in the general market. Microsoft and Alphabet, combining the latter’s Class A and Class C shares, make up about 20% of the Nasdaq’s total weighting and more than 9% of the S&P 500 Index.
But as a sign of their massive influence on the stock market, the magnitude was actually positive. The advances led the decliners about 2-to-1 on the NYSE and Nasdaq in afternoon trading.
After a day of tracking on Friday, IBD’s The Big Picture column said at least a near-term market bottom was in place, but warned investors to limit exposure to 20%, given multiples. risks facing the stock market. The way the indices rebounded from their initial declines today could be seen as a bullish sign.
Thus, investors could increase exposure to 40% of their portfolios, or even 60% for aggressive investors. Showing restraint is always a good strategy: next week the Fed will meet on interest rates and the next jobs report is due out. Other earnings reports will also be announced.
Wingstop, ADM leaves the bases
Some consumer stocks rallied on earnings, including wing stop (WING). The restaurant chain has passed the buying point of 148.94 of a consolidation in intensive trade and is already extended. The pattern can also be interpreted as a shorter than usual double bottom with a buy point of 142.03.
Archer-Daniels-Midland (ADM) broke above its buy point of 92.36 on strong earnings. ADM is in the buy range at 96.98.
In solar stocks, Enphase Energy (ENPH) jumped above its 50-day moving average as it continues to form a cup base. The company’s third-quarter sales and earnings beat expectations Tuesday night.
IBD 50 outperforms the stock market
The Innovator IBD 50 ETF (FFTY) defied the stock indexes and gained 1.9% by midday. Energy and packaging stocks gave the IBD 50 a boost in early trading.
Silgan Holdings (SLGN) – which makes containers for healthcare, beverage, personal care and other uses – rose more than 3% after the company’s earnings report.
New Fortress Energy (NFE) climbed more than 4% and added some space above its 50-day moving average. The stock forms a cup base with a buy point of 63.16. Devon Energy (DVN) rose 3.2% and remains in the buy zone from a buy point of 75.37.
But Owens Corning (OC), a relatively new face on the IBD 50, pared its loss to 3% after third-quarter sales came in slightly below estimates.
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