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Stocks Higher As Street Watches G-7; Is Homebuilding Industry Trying For A Comeback?

The stock market held higher Friday afternoon, although gains were modest as Wall Street kept a watchful eye on the G-7 meeting in Canada.

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The Dow Jones industrial average climbed 0.3%. Procter & Gamble (PG) extended gains. The consumer products giant has been rising since Thursday on word that a reorganization plan may be taking root. UnitedHealth Group (UNH), another Dow component, cleared the 250.89 buy point of a cup-type base. But volume was light.

The S&P 500 added 0.3% and the Nasdaq composite 0.2%. Weakness in semiconductor and data storage shares contributed to the Nasdaq’s slightly lower performance.

Apple (AAPL), its biggest stock, gapped down after the Nikkei Asian Review reported that Apple has told suppliers to brace for about 20% fewer units of new model iPhones in the second half of 2018 compared with the same period a year ago.

Some Apple chip suppliers were sharply lower.  Cirrus Logic (CRUS) and Skyworks Solutions (SWKS) fell about 3%. Analog Devices (ADI) and Qorvo (QRVO) dropped about 1%.

Volume was tracking lower compared with the same time Thursday.

Wall Street’s focus was on the G-7 meeting in Canada. The gathering of major western leaders is expected to be frosty as President Trump presses allies to change trade policies. Trump added to tensions Friday, when he said Russia should return to the G-7. Russia was expelled four years ago in protest over its annexation of Crimea.

Despite the market’s gains, defensive sectors such as food, tobacco and alcoholic beverages were leading. But consumer stocks also led, with electronics stores, apparel and home furnishing groups among Friday’s leaders.

Homebuilders were one of the day’s top performing industry groups, up 2%. The group has been a loser this year, but it’s been bouncing modestly for a few weeks. IShares U.S. Home Construction (ITB) — an ETF that also includes suppliers such as Home Depot (HD) and Sherwin-Williams (SHW) — was up 2%. It was one of the best gains among unleveraged ETFs.

The homebuilding group is still near the bottom of IBD’s 197 industry rankings. A few builders such as Tri Pointe Group (TPH) and Pulte Group (PHM) are forming the right side of bases. But it’s too early to get excited about the group because most stocks remain deep in corrections. LGI Homes (LGIH), D.R. Horton (DHI) and Toll Bros. (TOL) remain deep in corrections.

The energy sector lagged as oil prices fluctuated. U.S. crude was down after JPMorgan reduced its oil price forecast and concerns about growing U.S. output and falling demand in China, CNBC reported. Crude pared losses and was only slightly lower Friday afternoon at $65.82 a barrel.

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