The Dow Jones Industrial Average tested early lows on Thursday afternoon, posting a 0.3% loss. A rally in tech stocks kept a floor under the Nasdaq composite, which is trading slightly higher at this hour.
Volume fell on the NYSE and Nasdaq in quiet trading, compared to the same time on Wednesday.
The Russell 2000 small-cap index has whipsawed through the session and is now up 0.3%. The S&P 500 fell with the Dow but has traded flat for most of the day.
The yield on the benchmark 10-year Treasury note fell 26 basis points to 2.86%. Crude oil lifted above resistance at $90, reaching $91.23 per barrel in mid-afternoon.
Mixed Economic Indicators
The job market continues to be strong, even as July's existing home sales fell to the lowest level since 2015, not including the start of the pandemic.
Initial claims for unemployment benefits rose less than expected, to 250,000. The previous week's numbers were revised to reflect 10,000 fewer claims than initially reported.
Jeffrey Roach, Chief Economist for LPL Financial, observed that the four-week moving average of initial claims fell for the first time in two months. Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli sees a stable job market supporting growth, corporate profits and the stock market. He expects a 50 basis point rate hike in September, followed by 25 basis points in November and December.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 33864.71 | -115.61 | -0.34 |
| S&P 500 | (0S&P5) | 4269.17 | -4.87 | -0.11 |
| Nasdaq | (0NDQC ) | 12938.22 | +0.26 | +0 |
| Russell 2000 | 197.63 | +0.02 | +0.03 | |
| IBD 50 | 29.41 | +0.24 | +0.82 | |
Last Update: 12:00 PM ET 7/27/2022 |
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A rate hike in September seems likely despite crude oil's decline. A more dovish stance will depend on the housing market, which is showing signs of slowing, and the strength of the labor market.
GDP headwinds including falling home prices and slower sales will likely result in a quicker end to the Fed's rate hike cycle. It's also possible the Fed will start cutting rates again once inflation appears to be on track, toward the 2% target.
In yet another sign of a strong economy, the Philadelphia Fed's Manufacturing Index rose to 6.2 after missing expectations in July. It returned to positive territory after two quarters of negative readings.
Solar Stocks On The Move
President Joe Biden on Tuesday signed the Inflation Reduction Act, giving a major boost to solar and renewable energy stocks.
Invesco Solar ETF is extended above a cup with handle and has a buy point of 78.92.
Canadian Solar is breaking through a buy point of 43.24 on strong volume, according to IBD MarketSmith.
Daqo New Energy is also rising after forming solid support along its 50-day moving average. Daqo earned a place in the highly-selective IBD 50 growth list.
SolarEdge has reached the 314.62 buy point of a cup-with-handle base.
IPO Leader Montauk Renewables is above its buy point of 16.75 in a cup base. In its second quarter, the company reported a profit of 13 cents per share while revenue grew 114% to $67.9 million.
Elsewhere, shares of Tesla seem to be building support along the 200-day line. The company has seen triple-digit earnings growth in five of the six most recent quarters and will likely benefit from the Act.
Network Giant and Dow Jones Leader Beats Views
Networking giant and Dow Jones leader Cisco Systems beat views with adjusted earnings of 83 cents per share on revenue of $13.1 billion. Record product orders and backlog showed strong demand. Analysts had estimated 82 cents per share on $12.73 billion, according to FactSet.
The company's own expectations were lower, at 60 to 70 cents per share on less revenue. Shares are surging nearly 6% on Thursday.
Networking components maker Juniper Networks and IBD 50 stock Arista Networks are rising in sympathy. Arista is on watch as it nears a buy point of 143.67 in a double-bottom base. Juniper is building support along its 50-day line.
Dow Jones Leader Drives Retail Gains
Dow Jones component Walmart topped estimates earlier this week while industry leader Target met revenue but missed earnings expectations.
BJ's Wholesale saw earnings rise to $1.06 per share on revenue of $5.1 billion. The company beat estimates of 80 cents on $4.7 billion. BJ's is surging above a 71.10 buy point in a double-bottom base.
Kohl's disappointed, lowering its earnings and full-year outlook. Revenue of $3.9 billion and earnings of $1.11 per share were lower than the same quarter last year while inventories rose 48%.
The company expects a further sales decline of 5% to 6% compared to 2021.
Analog Devices is paring yesterday's loss after beating estimates. The stock holds a strong 92 Composite Rating and is above a cup base with a buy point of 192.05. It is also trading above its 50- and 200-day moving averages.
Rating Upgrades
A host of stocks in the Retail-Apparel, Banks-Diversified Operations and Luxury-Services groups scored rating upgrades.
Avis Budget in the Leisure-Services group got an upgrade, lifting the relative strength rating to 91.
In the Retail-Apparel Shoes Accessories Group, TJX is in a cup base with a buy point of 77.45. Its relative strength rating has increased to 82. Designer Brands' relative strength just hit 87.
Warren Buffett's Berkshire Hathaway also got a Relative Strength Rating upgrade to 72.
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