The Dow Jones Industrial Average traded higher in today’s stock market, after erasing a 115-point drop. In the late afternoon trade, the top three indices continued to rise close to their day highs, but fell slightly at the close.
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At the close of the market, the low-capitalized Russell 2000 was down 0.8%. But the Nasdaq compound gained 1.2%, leading the bull market. The S&P 500 gained 0.7%, while the Dow Jones industrials advanced 0.3%. The volume was trading lower on the Nasdaq and NYSE compared to the same time as Friday.
On Monday, the shares were driven by a 10-year decline in Treasury yield. The 10-year Treasury yield was traded at around 1.693%, after hitting 1.75% last week. The benchmark reached a new record for the Covid era on Thursday. Yield fell briefly below 1.68% on Friday, but returned to 1.728% at noon on Friday.
Recent divergences in the main indexes occurred after the increase in long-term interest rates made riskier assets less attractive. Strong growth drove profit prospects among cyclical sectors, including oil, machinery, industrial, commodities and finance.
But this week, the trend appears to be stabilizing, as all major indices have moved in sync. As of Friday, banks and financial stocks were lagging among IBD’s 197 industrial groups. But several technology-related industry groups have made decent gains.
Chip stock forming new bases
Various semiconductor equipment and 5G chip companies were featured on Monday’s IBD Live. Chip stocks to watch include Applied Materials (AMAT) and Entegris (ENTG).
Applied Materials gained almost 4% in the afternoon trade. The stock of chip equipment appears to be forming a base with a buying point of 124.60. It has been trading strongly above the 50-day line since last November and maintains a rating of 86 RS.
Entegris, another chip equipment stock, traded 6% away from a key purchase point of 110.47 for a double-bottomed base. The shares rose well over 2%, as the shares were held above the 50-day line.
As for growth stocks, the Innovator IBD 50 ETF (FFTY) had a modest gain of around 0.4%. The growth-focused index last week regained support on the 50-day line after falling briefly below it. The stocks leading the rise on Monday were Digital Turbine (APPS) and ASML Holdings (ASML) with gains of more than 5% each.
ASML Holdings regained support in the 10-week line, with the shares of the chip gear maker showing a gap above this support area for the first time in a few weeks.
Dow Jones Today
As for Dow Jones, tech giants Intel (INTC), Apple (AAPL) and Microsoft (MSFT) led the rise with gains of more than 2.5% each. On the negative side, shares of financial stocks JP Morgan (JPM) and Goldman Sachs (GS) fell 1.4% or more each.
Intel shares gained almost 3% on Monday, with the shares being traded within the 5% buy zone of a double-bottomed base with a purchase point of 65.21. Intel shares already burst in the buying zone last week, but have fallen below the buying point. The buying zone reaches 68.47, according to the analysis of the MarketSmith chart.
Intel’s relative strength line, which has been rising more and more in recent months, still remains far from its highs. In addition, the RS rating of 50 remains well below the minimum of 80 that we would like to see for bursting growth stocks.
Elsewhere, Apple’s shares rose about 3%. But stocks still remain below the 50-day moving average.
Walgreens Boots Alliance (WBA) rose more than 0.5% on Monday afternoon. Last week, stocks burst briefly, surpassing a 55.59 point buyout of a glass with handle, before reversing downward. Since then, Walgreens’ shares have fallen about 5% below the initial value and even briefly triggered the 7% -8% sale rule.
The company is expected to disclose its second quarter 2021 tax profits on March 31, before the market opens.
Microsoft’s leaderboard shares gained about 2.5%, being traded above the 50-day line and kept in a buying zone. Microsoft is also a stock of the IBD Long-Term Leader.
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