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Dow Jones Up; Will 4 Sectors Wave Away Bear Market?

The Dow Jones industrial average saw gains shriveling in the final hour of trading Wednesday. An early advance of 0.8% shrank to around 0.2% as the Dow still bids to end a two-day 1,000-point slaughter on Wall Street. The real rebound in stocks today so far is coming from the Nasdaq composite. The tech-rich index rallied 1.1% with a half hour left in the session, and small-cap equities.




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At around 3:30 p.m. ET, the small-cap S&P 600 jumped 1.3%, the Russell 2000 up 1.4%. The S&P 500 gained 0.5%.

Top industry groups of the day include oil royalty trust and international oil exploration stocks as WTI crude oil futures rose 1.7% to $54.34 a barrel. Gaming, design software, database software, specialty steel alloy, metal product distribution, jewelry retail and ship transport stocks also outperformed with gains of 3% or more for the day.

Volume is running lighter vs. the same time on Tuesday on both main exchanges as equity desks across the country head out early for Thursday’s Thanksgiving holiday.

The Dow Jones industrial average, despite lagging in the rebound, helps showcase the possibility that four sectors may help Wall Street get out of its current funk.

These Sectors May Help Hoist The Dow Jones Industrials

As seen by the likes of Verizon Communications (VZ), McDonald’s (MCD), Merck (MRK), Pfizer (PFE), Intel (INTC) and Walt Disney (DIS), strength in the areas of telecommunications, retail and consumer spending, medicine and computer technology could help the U.S. stock market avoid a 20% correction from recent highs. That’s the minimum decline required for an official bear market.

Meanwhile, Dow Jones industrial component Johnson & Johnson (JNJ) dropped 3% in heavy trading on news that it lost a generics-related lawsuit. The stock recently tried to break out past a 143.23 proper buy point.

Another key sector may be the REITs, which provide quarterly dividends to satisfy income needs of both institutional and individual investors.

Verizon, McDonald’s, J&J and Pfizer have also risen steadily since staging sound breakouts from long bases including the saucer base and the flat base. Among IBD’s 197 industry groups, the wireless telecom services group is the new No. 1 for six-month relative price performance. Starbucks (SBUX) has also joined the market leadership ranks lately.

Intel has recently climbed back above its critical 50-day moving average and is now etching the right side of a potential large base.

Top Growth Stocks From Canada: Watch Lululemon

In the consumer space, Lululemon (LULU) gained 2% to 124.15, one day after kissing its 200-day moving average for the first time in more than a year.

The Vancouver-based marketer and retail seller of premium-priced yoga pants, athletic shirts and jackets stands as one of nine stocks currently taking a half or full-size position on IBD Leaderboard. Since its Feb. 7 entry on the stock list of high-performance stocks, Lulu has rallied as much as 101% to a peak of 164.79.

Now, Lululemon is forming a brand-new base. At 124, the stock is 24% below the cup’s left-side peak.

Watch The Medical Products Leaders

Elsewhere, NYSE-listed Edwards Lifesciences (EW), the IBD 50 Growth Stocks To Watch feature of the day, is also working on a new base.

The company distinguishes itself as a pioneer of heart valves and other cardiovascular health technologies. The stock is trading above its 200-day moving average while the NYSE composite continues to twiddle beneath its 200-day line. This is a bullish factor for Edwards.

In Other Financial Markets

Long-term government bond prices are staying near recent short-term highs. The yield on the benchmark U.S. Treasury 10-year note is at 3.06%, still well below its recent peak of 3.24%.

Futures traders are forecasting a nearly 76% probability that the Federal Reserve will raise the short-term fed funds rate by a quarter-point to a 2.25%-2.5% range when the U.S. central bank meets for the final time on interest rate policy on Dec. 18-19.

Please follow Chung on Twitter at @IBD_DChung for more on financial markets.

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