Stocks Thrust Higher; Breakouts Among Leaders Missing

Stocks pushed higher in late morning trade Tuesday, as the stock market waited for news this week on interest rates and a U.S. government shutdown. Meanwhile, despite gains in the stock indexes, breakouts were missing.


The Dow Jones industrial average rose 0.9%, while the Nasdaq and the S&P 500 added 0.6% and 0.5%, respectively. Small caps showed a 0.6% gain in the Russell 2000.

Volume crawled higher on the Nasdaq and lower on the NYSE compared with the same time Monday.

The Federal Reserve is meeting today and Wednesday. After Wednesday’s meeting, the Fed will announce its decision on rates.

Street Expects Rate Hike

Most rate watchers expect the Fed to raise rates a quarter point. But CME Group’s FedWatch Tool pegs the odds for no increase at 28.5% vs. 24.2% a week ago.

After the market gets clarity Wednesday on rates, another deadline looms. Congress and the White House have until midnight Friday to approve a budget deal and avoid a government shutdown.

Historically, government shutdowns have not been a huge deal to the stock market. LPL Financial’s research shows that the S&P 500 rose in each of the past five shutdowns going back to 1995.

Blue Chips Mostly Up

Blue chips led the major indexes Tuesday morning. Gainers in the Dow led losers by a better than 8-to-3 ratio. Boeing (BA) jumped 4%. The aerospace company announced it is raising its quarterly dividend from $1.71 a share to $2.055.

Fellow Dow component Caterpillar (CAT) popped 3%, and Intel (INTC) added about 2.5%.

Top-rated stocks were mostly up, but volume was mediocre. Five9 (FIVN) advanced about 3% in volume 30% slower than normal. Kirkland Lake Gold (KL) crept 2% higher in volume 10% above average.

Bear Market In Small Caps

IBD’s market outlook shifted Monday from under pressure to correction. So far in this pullback, the Nasdaq has declined as much as 17.5%; the S&P 500, 14%; the Dow, 13%; and the S&P 600, 22%.

Small-cap gauges are the only ones that have signaled a bear market so far. The traditional line for a bear market is 20% or more off the high.


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Originally posted 2019-09-19 23:28:27.


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