Blue Chip Dow Leads, But Nasdaq Adds To Losses

The blue chip Dow Jones industrial average led the stock market late Friday morning, as most stocks scored gains in the Dow. Meanwhile, President Donald Trump tweeted a threat of a government shutdown “that will last for a very long time.”




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The Dow Jones rose 0.1%, while the large-cap S&P 500 was down 0.2%. Small caps struggled in the Russell 2000, losing 0.9%. The Nasdaq slid 1.3%.

Volume was sharply higher as futures and options on indexes and individual stocks expired.

The stock market took President Trump’s shutdown threat in stride. In the past, threats of a government shutdown have rarely affected the market. Trump is seeking billions in funding for a border wall and is threatening a shutdown if Congress doesn’t grant it.

In the 30-component Dow, a half-dozen stocks were lower. Walgreen Boots Alliance (WBA) fell, trimming 1.9%. Among the winners, Nike (NKE) leapt 8%; Verizon (VZ), 1%; and Coca-Cola (KO), 1.8%.

Nike reported fiscal Q2 results late Thursday, topping the consensus estimates on earnings and revenue.

In the IBD 50, a proxy for top-rated stocks, winners and losers for the day were almost evenly divided. Ad platform provider Trade Desk (TTD) skidded about 8% in volume 60% above average. On the upside, upscale retailer Lululemon Athletica (LULU) advanced 1.2% in volume 15% above average.

Lululemon has been consolidating since early October. The stock is about 29% off its high. Lulu needs to build the right side of the potential pattern.

Ex-Leaders Down

Former leaders in the FANG camp fell without exception. Facebook (FB) slid 5%; Amazon.com (AMZN), 4%; Netflix (NFLX), 6%; and Alphabet (GOOGL), 2.5%. Apple (AAPL) — which is often included in the group despite much slower three- and five-year growth rates — fell 1.7%.

Leaders in one cycle seldom lead in the next. When the time to buy arises again, bulls might have to look elsewhere for leadership.

Such a search will be a three-step process. First, the market must shift back into a clear uptrend. Second, leading sectors and industry groups must be identified. Third, the strongest stocks in the leading groups are where the likely new leaders will be.

Economic News

In financial news, the final reading on third-quarter GDP growth was released. The Street expected 3.5% growth, but the percentage came in at 3.4%.

Durable goods orders for November missed views. Analysts expected 1.4% growth in new orders, but the growth rolled in at 0.8%. Core capital goods fell 0.6% vs. expectations for a 0.3% gain.

Personal income in November inched up 0.2% vs. views for 0.3%, but consumer spending topped the consensus estimate, 0.4% vs. 0.3%.

The University of Michigan’s consumer sentiment report came in at a strong 98.3, which was above the highest estimate in the range.

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