Stock Market Rally Continues with Mixed Session

Strategic Insights -

The stock market rally experienced a relatively quiet session after last week's significant gains, with mixed performances across various indices. The Dow Jones Industrial Average dipped 1.1%, mainly due to Goldman Sachs and Travelers weighing on blue chips, while the S&P 500 index edged down 0.2%. In contrast, the Nasdaq composite advanced 0.1%. The small-cap Russell 2000 edged down 0.1%, while U.S. crude oil prices rose 0.4% to $80.18 a barrel, closing above $80 for the first time in two weeks.

Key Takeaways:

  • The Bank of Japan left its monetary policy unchanged, maintaining its policy of keeping rates and Japanese sovereign debt near 0%, and effectively hiking rates in December by letting the 10-year Japanese yield rise to 0.5%.
  • United Airlines and Interactive Brokers reported strong earnings, with United Airlines comfortably beating Q4 views and giving bullish guidance, while Interactive Brokers topped views as well.
  • Moderna's RSV vaccine showed strong results, with the biotech's RSV vaccine using its mRNA technology, leading to a solid bounce in MRNA stock.
  • Microsoft may announce new job cuts as early as Wednesday, with the cuts potentially being "significantly higher" than prior layoffs, which would translate to 11,000 jobs.
  • A pause in the market rally would be normal or even healthy, providing a chance for stocks to form handles or shelves and allowing investors to identify safer opportunities ahead.
  • Investors should be patient and run their screens for leading stocks that are showing promising action, and gradually increase exposure as the market offers more stocks flashing buying signals.

Statistics:

  • The Dow Jones Industrial Average dipped 1.1% in Tuesday's session.
  • The S&P 500 index edged down 0.2%, with Tesla stock and Morgan Stanley the top performers.
  • The Nasdaq composite advanced 0.1%.
  • U.S. crude oil prices rose 0.4% to $80.18 a barrel, closing above $80 for the first time in two weeks.
  • The 10-year Treasury yield rose 2 basis points to 3.53%.
  • The Innovator IBD 50 ETF dipped 0.2%.
  • The iShares Expanded Tech-Software Sector ETF edged up 0.3%, with Microsoft stock a major holding.
  • The VanEck Vectors Semiconductor ETF climbed 0.6%.
  • ARK Innovation ETF popped 2.9% and ARK Genomics ETF 1.8%, both extending gains from the 50-day line.

Sources:

  • Bloomberg, citing sources, on Microsoft job cuts
  • MarketWatch, citing IBD, on Chevron, Vertex Pharmaceuticals, and TJX Cos. stocks
  • Investor's Business Daily, citing IBD, on the stock market rally and Dow Jones futures
  • The Wall Street Journal, citing sources, on the Bank of Japan's monetary policy decision