A day after suffering its worst loss since May, the stock market rebounded Tuesday. Hobbled small caps made the strongest showing.
The S&P 500 climbed 1.5% and traded at session highs at midday. More important, the index bounced off the 50-day moving average, a level that has provided a floor several times this year. The move bodes well for the stock market’s struggles of the past few days.
The Nasdaq composite was up 1.4%, making a bid to end the longest losing streak since Oct. 13-19. Relative weakness in software, internet and other technology stocks cut into the Nasdaq’s performance.
The Dow Jones Industrial Average rose 1.7%. IBM (IBM) led with a 4.5% jump after the company beat sales and profit expectations late Monday. The stock is forming a flat base with a 152.94 buy point. Today’s gain is so far the largest since Oct. 8, when it rose 6%. According to Dow Jones Market Data, Honeywell (HON), up 3%, and Big Blue combine for nearly 100 points of the Dow’s 470-point rally.
Small Caps Lead Stock Market
The small-cap Russell 2000 jumped 2.6% as it tries to snap its largest five-day decline since March 24, according to Dow Jones Market Data. The index is trying to break a five-day losing streak, its longest since June 18.
U.S. Stock Market Today Overview
Last Update: 11:50 AM ET 7/20/2021
Volume was markedly lower than at the same time on Monday, indicating that major investors are holding off on buying back shares. Still, advancing stocks led decliners by 11-to-2 on the NYSE and by better than 3-to-1 on the Nasdaq.
The main stock market indexes remain near record highs, but cooled off in a hurry the past few days. The S&P materials, transportation and energy sectors fell more than 10% from prior highs; that typically defines an index correction.
The Energy Select Sector SPDR ETF (XLE) bounced 2% but has a lot of recovery work to do. U.S. crude prices rose 0.7% at $66.85 a barrel, near the lowest since late May.
The S&P Transportation ETF (XTN) rebounded 2.7% after finding support at the 200-day moving average.
Health Care Among Strongest Sectors In Stock Market
The health care sector rose 1.4%, and that move included a couple of breakouts. Pfizer (PFE) topped a 41.19 buy point in heavy volume. Covid vaccine stocks are rising as more cases of the delta variant spread across the U.S. and other countries.
Hospital operator Tenet Healthcare (THC) rose above the 70.85 buy point of a flat base in heavy trading. Medical research equipment maker Thermo Fisher Scientific (TMO) rose past the 524.36 buy point of a handle, but volume was weak.
The Innovator IBD 50 ETF (FFTY) climbed more than 2%. Relatively few IBD 50 stocks are in buy areas or setting up in attractive chart patterns. Investors need to choose carefully, especially with the stock market outlook clouded.
Alphabet (GOOGL) is back in buy range, according to MarketSmith pattern recognition. Shares edged up in midday trading. IBD Leaderboard stock Nvidia (NVDA) eased 1.5% but is finding support at the 10-week moving average after an eight-day 14% wipeout.
Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia
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