U.S. Stock Indexes Up Moderately; Breakouts Scarce, But Retailer RH Soars

U.S. stock indexes advanced cautiously late Tuesday morning, after news on the U.S.-North Korea negotiations and the Federal Reserve’s meeting excited neither the bulls nor the bears.


The Nasdaq grinded 0.5% higher, while the Dow Jones industrial average was just above the break-even line. The large-cap S&P 500 edged up 0.2%, but the small-cap Russell 2000 rose 0.5%.

Volume rose modestly on both major exchanges compared with the same time Monday.

President Trump’s talks with North Korean dictator Kim Jong Un brought quiet reactions in world stock markets. The one exception was China’s Shanghai Composite, which popped 0.9%.

Some market watchers say China was the summit’s real winner. Trump agreed to halt U.S.-South Korean military exercises, something China has suggested for years.

The market’s muted action suggested that the summit’s outcome was a nonevent, as far as institutional investors are concerned.

Meanwhile, the Federal Reserve began its two-day meeting. A quarter-point interest rate hike is expected to be announced Wednesday. CME Group’s FedWatch Tool sees a 91.3% likelihood of a rate hike to the 1.75% to 2% range. Rates currently are set at 1.50% to 1.75%.

Comerica Rises

The superregional banks group, an expected beneficiary of higher rates, rose 0.9% but then faded to a 0.4% gain.

Within the group, Comerica (CMA) led with a 1.9% gain. The stock has shaped a flat base with a potential buy point at 102.76. Comerica is about 6% off its high.

Among IBD’s 197 industry groups, the day’s leaders included home furnishings, automakers, oil explorers and software. On the downside, shippers and airlines fell.

In upscale home furnishings, RH (RH) gapped up 35% in follow up to strong quarterly results. The company also raised guidance. RH was formerly known as Restoration Hardware.

Tesla (TSLA) boosted the automaker group with a 5% gap up in strong volume. The stock is 10% off its high. Tesla has lost money in each of the past three years. The Street doesn’t expect a profit until 2019.

Breakouts were sparse Tuesday, but Molina Healthcare (MOH) stabbed 4% higher in heavy volume. The midcap stock cleared a 91.25 buy point and scored a new high. Molina is a slow grower. The company’s five-year earnings growth rate is 7%.

Economic Data

In economic reports, the National Federation of Independent Business posted its optimism index for May. The gauge registered 107.8, which was above the consensus view for 105.2 and above the highest estimate in the range (106.4).

The consumer price index for May rolled in at 0.2%, as expected.


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Originally posted 2019-09-19 23:16:03.


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