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Dow Outperforms in Choppy Trading Day
By: Schaeffer's Investment Research
"Trading was mixed today, as home builders and consumer
discretionary issues performed poorly, while commodities and energy
led," summarized Schaeffer's Senior Equity Analyst Joe Bell, CMT,
of a session where the
Dow Jones Industrial Average (DJI)
fared the best of the broader-market indexes. "The ISM
Manufacturing Index fell more than expected -- showing its first
contraction since November 2012 and lowest reading since June 2009.
Various sectors had conflicting reactions to this news."
Continue reading for more on today's market, including :
- Schaeffer's Senior Trading Analyst Bryan Sapp points out a new level to watch on the S&P 500 Index (SPX).
- Our Senior Options Strategist Tony Venosa, CMT, demonstrates where (and why) to play Deere & Co. ( DE ) for further upside.
- 4 stocks under the spotlight this week -- and what the sentiment picture says about each.
- Auto sales zoom higher, Apple Inc. (
) makes waves in the music industry, and Research In Motion (
) option traders place big bets.
The Dow Jones Industrial Average (DJI) started in the green and continued to power higher throughout the trading session, finishing the day just a chip-shot shy of its intraday peak. By the close, the blue-chip index was up 138 points, or 0.9%, at 15,254.03, but still below its 10-day moving average. Today's rally was broad across the Dow, as 28 of 30 components moved higher, led by Intel ( INTC ) and Merck ( MRK ), which respectively gained 4% and 3.8%. The two decliners were Bank of America (BAC) and JPMorgan Chase (JPM), down 0.8% and 0.2%, respectively.
Gains were not as robust for the S&P 500 Index (SPX) , which added 9.7 points, or 0.6%, today, to settle at 1,640.42. The Nasdaq Composite (COMP) was the laggard of the day, muscling 9.5 points, or 0.3%, higher, to end the session at 3,465.37. Both the SPX and the COMP closed near their intraday highs, but both remain below their respective 10-day moving averages.
After a notable gain on Friday, the CBOE Market Volatility Index (VIX) drifted fractionally lower today. The VIX gave back less than 0.1 point, or 0.1%, to settle at 16.28.
A Trader's Take :
"The Dow's performance was the real bright spot today," added Bell. "Since it's a price-weighted index, the extremely strong day from Merck ( MRK ) bolstered the index well above its counterparts. The drugmaker was higher following positive results in one of its trials."
3 Things to Know About Today's Market :
- The Institute for Supply Management (ISM) reported that its manufacturing index suffered a surprise pullback to 49.0 last month -- the first reading south of 50 since November. Elsewhere, the Commerce Department announced that construction spending edged up 0.4% in April to a seasonally adjusted annual rate of $860.8 billion. This also fell short of what economists had been expecting. (Reuters, Bloomberg)
- Auto sales muscled higher in May, with total light vehicle sales in the U.S. rising 8% from the year-ago period to more than 1.4 million vehicles. Ford Motor (F) said its sales jumped 14% during the month (its best May on record since 2006), while General Motors (GM) announced a 3.1% increase in sales on a year-over-year basis. (Los Angeles Times)
- In what seems like a preemptive move to launch a streaming music service , Apple Inc. ( AAPL ) signed a deal with Warner Music Group for the rights to its catalog. Apple's annual developers conference starts next Monday, which could be the perfect time to unveil a new project. (The Wall Street Journal, login required)
5 Stocks We Were Watching Today :
- Research In Motion Ltd ( BBRY ) calls were in high demand today ahead of the U.S. launch of the Q10 smartphone.
- Pandora Media Inc (P) dropped almost 11% on the Apple streaming-music rumors , but one trader made a hopeful short-term bet.
- Conservative bullish traders bought a bull call spread in Ciena Corporation (CIEN) ahead of the company's earnings report.
- LinkedIn Corp (LNKD) was given a new "outperform" rating -- and a price target of $220 -- but still drifted into the red.
- Facebook Inc (FB) back-month puts were in focus today, as the stock continued its recent slide .
For a look at today's options movers and commodities activity, head to page 2.
The U.S. dollar was pressured lower following weaker-than-expected manufacturing data, and this helped send crude oil to a higher finish. July-dated oil futures rose $1.48 today, or 1.6%, to settle at $93.45 per barrel. This move was not quite enough to pare Friday's losses in the commodity.
Gold futures also gained ground, as investors grew less concerned of a near-term end to the Federal Reserve's bond-buying efforts. At the close, August gold was sitting $18.90, or 1.4% higher, at $1,411.90 an ounce.