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Dow Jones Up 0.3% As Transportation Stocks Lead The Market

Stocks closed narrowly mixed Wednesday as the Dow Jones industrial average led a session in which transportation stocks stood out.

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The Dow added 0.3%. Dow component UnitedHealth Group (UNH) climbed 2% as shares found support in a pullback to the 50-day moving average. The stock most recently broke out of a base in June. Citigroup and Royal Bank of Canada both raised their price target on UnitedHealth, a day after the health insurer reported a 28% rise in EPS for the second quarter.

The S&P 500 rose 0.2% while the Nasdaq composite was flat. The Russell 2000 climbed 0.2%. Volume rose across the board, based on initial figures. Advancers led decliners by a 5-to-4 ratio on the Nasdaq and by 6-to-5 on the NYSE.

Indexes had little reaction to the Fed’s Beige Book release this afternoon. The survey of economic conditions in the Fed districts saw continued economic expansion but concerns about a tight labor market. Manufacturers in some areas saw higher prices and supply difficulties due to new trade tariffs.

Transporation stocks led, with the Dow transports leaping 2.3%. Airlines (up more than 3% Wednesday) and railroads spearheaded the sector. Air freight and trucking industry groups also were in the top 10 groups. A strong transportation sector is regarded as a good sign for the overall economy.

United Continental (UAL) soared 9%, briefly touching the highest level in a year, after the airline beat profit and sales expectations and management raised its full-year outlook late Tuesday. The stock cleared a 75.63 buy point.

CSX (CSX) jumped past the 67.79 buy point of a flat base after the railroad operator beat profit expectations late Tuesday. CSX reported earnings that rose 58% to $1.01 a share and revenue up 6% to $3.1 billion.

In consumer stocks, Shoe Carnival (SCVL) broke out of a flat base with a 35.08 buy point. Despite good volume, the retailer closed below the entry. Five Below (FIVE) topped the 104.09 entry of a flat base. Volume was about 25% more than average. The stock has been an IBD Leaderboard member.

Blackstone Group (BX) broke out of a cup with handle in heavy volume. The investment management firm reports earnings Thursday morning.

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