The stock market was firmly lower near midday Tuesday, but volume fell off sharply. Big names in the Dow Jones industrial average bled with Caterpillar (CAT) losing 3.8% and Apple (AAPL) and Intel (INTC) down about 2% each.
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As the market approached the noon hour, the Dow Jones industrial average was off 0.8%; the Nasdaq, 1.1%; and the large cap S&P 500, 0.9%. Small caps did worse with the Russell 2000 down 1.7%.
Volume ran lower than the previous session.
Only a handful of stocks broke out. Gildan Activewear (GIL) climbed to a 34.29 buy point and then eased just under the entry. Managed-care provider Centene (CNC) showed similar action around a 148.34 buy point but lacked strong volume. Gold miner AngloGold (AU) flirted with a 10.57 buy point in a cup with handle base.
One flaw so far in the current uptrend is the scarcity of breakouts. The stock market still has time to shift into a faster gear. IBD-style investors should watch recent buys closely and tidy their watch lists.
Blue Chips Down
Blue chips in the 30-component Dow Jones were mostly down. Caterpillar unwound all of Monday’s 2.4% gain. Intel did the same. Apple fell but kept part of Monday’s 3.5% pop after HSBC downgraded shares to hold.
In the IBD 50, a proxy for top-rated stocks, retail stocks took hard hits in fast trade. Dollar General (DG) gapped down 5% on a weak outlook tied to hurricane costs. Five Below (FIVE) skidded 3%; the company pushed back its conference call to Thursday but will nonetheless release results after the close Wednesday. Ulta Beauty (ULTA), which will report after the close Thursday, stabbed 4% lower. Lululemon Athletica (LULU), which also will report after Thursday’s close, dipped 1%.
On the upside of retail, restaurant chain Wingstop (WING) edged up 0.6% in soft volume. In the meantime, upscale home furnishings chain RH (RH) jumped 16% after trouncing views on earnings by 36%.
Yield Curve And The Stock Market
Some market watchers worried as the yield curve flattened to 12 basis points between the 10-year Treasury and the 2-year note. The fear is that an inverted yield curve signals the coming of a recession.
The problem is that the recession is sometimes a year or two in coming, which makes this indicator of little use to traders. A look at the past 20 inversions found no actionable trend overall. The market rose after the inversion about as often as it fell.
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