Stock Market Bounce Fades As Nasdaq Falls Toward Session Lows

The stock market’s midday bounce faded in early afternoon trading, although indexes remained above the lowest levels of the day.




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The technology-heavy Nasdaq was down 1.6% after nearly erasing a 2% opening loss. The S&P 500 reversed higher but around 1:30 pm ET was back down 0.5%. The index climbed above the 50-day moving average, but has dipped slightly below it.

Small caps continued to outperform, with the Russell 2000 up 1.3%. It had climbed more than 2% earlier. Volume rose on the Nasdaq and NYSE compared with the same time on Tuesday.

The Dow Jones Industrial Average added 0.3%. In the Dow, Visa (V) provided some comfort with a gain of nearly 4% after its quarterly report. The stock extended a move above the 50-day moving average.

Boeing (BA) rose more than 1% even though earnings missed expectations. The stock appeared to rise on General Electric‘s (GE) bullish outlook for the aviation industry.

The yield on the 10-year Treasury note fell 9 basis points to 4.2%, and it may be helping the stock market. The Bank of Canada hiked interest rates by 50 basis points today, not the 75-basis-point increase markets expected.

New home sales fell to 603,000 in September, better than economists expected.

Stock Market Uptrend Strengthens

The stock market had every reason to tank after disappointing third-quarter results from Alphabet (GOOGL) feels shares down 6%. A weak outlook from Microsoft (MSFT) triggered a major slide, dropping the software and cloud giant 5.2%. Yet, indexes bounced back

The pair also accounted for much of the broad market’s early decline. Microsoft and Alphabet, combining the latter’s class A and class C shares, represent about 20% of the Nasdaq’s total weighting and more than 9% of the S&P 500 index.

But in a sign of their massive influence on the stock market, breadth was actually positive. Advancers led decliners by roughly 2-to-1 on the NYSE and Nasdaq in afternoon trading.

After a follow-through day on Friday, IBD’s The Big Picture column said at least a short-term market bottom was in place but cautioned investors to limit exposure to 20%, given the multiple risks facing the stock market. The way indexes rebounded from their early slides today could be seen as a bullish sign.

Thus, investors could increase exposure to 40% of their portfolios, or even 60% for aggressive investors. Exercising restraint is still a good strategy: Next week the Fed meets on interest rates and the next employment report is due out. More earnings reports will be announced, too.

Wingstop, ADM Break Out Of Bases

Some consumer stocks rallied on earnings, including wingstop (WING). The restaurant chain soared past the 148.94 buy point of a consolidation in heavy trading and is already extended. The pattern may also be interpreted as a shorter-than-usual double bottom with a 142.03 buy point.

Archer-Daniels-Midland (ADM) broke out above its 92.36 buy point on strong earnings. ADM is in 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 topped expectations late Tuesday.

IBD 50 Outperforms Stock Market

The Innovator IBD 50 ETF (FFTY) challenged the stock market indexes and rose 1.9% at midday. Energy and packaging stocks gave the IBD 50 a boost in early trading.

Silgan Holdings (SLGN) — which makes containers for health care, beverages, personal care and other uses — gapped up more than 3% following 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 is forming a cup base with a 63.16 buy point. Devon Energy (DVN) rose 3.2% and remains in the buy zone from a 75.37 buy point.

Aim Owens Corning (OC), a relatively new face on the IBD 50, trimmed its loss to 3% after Q3 sales came in slightly below estimates.

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