The stock market gained Wednesday as the U.S. trade deficit in goods fell and oil prices jumped. Netflix and biotech stocks rallied. Apple shares sank more than 2% after a report alleged the company will not increase iPhone 14 production at this time.
The S&P 500 and Dow Jones Industrial Average each climbed 1.7%. The Nasdaq composite posted a gain of 1.2%. Small caps outperformed as the Russell 2000 rallied nearly 2.6%.
Volume rose on the Nasdaq and the NYSE vs. the same time on Tuesday. This is bullish for the short-term rally attempt.
The yield on the benchmark 10-year Treasury note topped the 4% mark overnight and backed off after the Bank of England stepped in to shore up U.K. government debt. The U.S. 10-year yield fell 16 basis points to 3.78% in early afternoon trading.
Trade Deficit In Goods Forecasts Positive Growth
The U.S. trade deficit in goods narrowed in August to $87.3 billion, down from a revised $90.2 billion in July, and below the Econoday consensus of $88.7 billion.
"After two consecutive quarters of negative growth, the U.S. will likely reverse course and eke out positive growth in Q3 as a strong dollar narrows the trade deficit," said Jeffrey Roach, chief economist for LPL Financial. "The strong dollar lowered the cost of imports in August. The trade gap should further narrow as businesses close the books for Q3."
Apple sold off 2.3%, sinking to the lowest since July 14.
Bloomberg reported the company is rolling back plans to boost production of its new iPhone 14 model, after an expected burst of demand failed to materialize. Apple said previously it planned to boost production by as much as 6 million units.
Netflix climbed more than 7% after Atlantic Equities upgraded the stock to overweight. Netflix plans to launch an ad-supported service on Nov. 1 and increase the ad-free streaming service price.
Stock Market Gains As Oil, Coal Stocks Surge
RV maker Thor Industries rallied nearly 4% Wednesday after the company reported earnings and sales that beat Wall Street estimates. Net income for the fiscal fourth quarter was $5.15 per share, compared with the $3.81 FactSet estimate.
Oil and coal stocks rallied after crude oil prices shot up 4% to $81.50 per barrel, in reaction to reports of sabotage on Europe's Nord Stream gas pipeline. Oil giants Exxon Mobil and Chevron both gained more than 2%.
The Innovator IBD 50 ETF traded up 1.7%, powered by oil stocks Occidental Petroleum and HF Sinclair.
Coal stock Alpha Metallurgical gained ground as well. AMR is struggling to form a base after more than doubling in price so far this year.
Coal stocks are outperforming due to the natural gas shortage as power plants, both here and abroad, try to meet demand.
Biotechs Rally After Drugs Show Promise
Biotechs rallied in Wednesday's stock market after Crispr Therapeutics said it will seek Food and Drug Administration approval for what could be the first treatment that uses CRISPR gene-editing technology.
CRSP stock jumped more than 2% but is testing resistance at the 200-day line.
IBD 50 member Vertex Pharmaceuticals, which is partnering with Crispr Therapeutics, rose more than 2%. It is forming a flat base with a 306.05 buy point.
In another bit of good news for the industry, Biogen rocketed more than 35% after its experimental Alzheimer's drug, created in partnership with Japan's Eisai, showed promising results. Eisai shares soared nearly 60% to a record high.
Biogen stock is at its highest level since November and on pace for the best daily performance since November 2020, when shares rose nearly 44%, according to Dow Jones Market Data.
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