Investor appetite for large-cap tech stocks appeared to return in the stock market today. The Nasdaq led the advance. Internet retail, chip equipment, nonalcoholic beverage, hospital and travel booking stocks all rose 1% or more.
But oil and gas, property REIT, bank and dairy stocks bled red ink with losses of 1.5% or higher.
Please view the entire daily performance of all 197 industry groups tracked by IBD at IBD Data Tables, located under "Stock Lists" on the main navigation bar of Investors.com.
The Nasdaq 100's highly liquid ETF tracker, Invesco QQQ Trust, finished strong. It rose 1.2% and hit a session high of 366.33. That advance ate considerably into Wednesday's 1.3% decline in rising-yet-average turnover.
The Nasdaq composite rose more than 0.9%. At 13,630, the market cap-weighted index has rallied more than 30% since Jan. 1. It also is trading just 1.7% below a year-to-date peak of 13,864. The premier index for growth stocks got slammed 33.1% lower in 2022.
Volume on the Nasdaq ran more than 13% lower vs. its Wednesday pace, according to MarketSmith. NYSE turnover fell around 4%, early data showed.
Crude oil got whacked, with NYMEX futures sinking 4% to $69.51 a barrel. Gold dropped 1.1% to $1,923 an ounce.
The yield on the benchmark U.S. Treasury 10-year bond rose 7 basis points to 3.79%. The 10-year-bond yield has continued to trade in a relatively narrow band of 3.57% to 3.85% since mid-May.
As noted in Wednesday's Big Picture column, the Nasdaq narrowly avoided a distribution day, or bout of intense professional selling, as fund managers decided to take more profits.
No doubt, June's rally has been strong and impressive, given that the Federal Reserve decided to hit the pause button on its 15-month campaign to raise interest rates and push inflation lower to its long-term target of 2%-2.5%. On Wednesday and Thursday, however, Fed Chairman Jerome Powell reiterated the need to keep the central bank's efforts going in order to get inflation down to a more palatable level of 2% to 2.5%. Thus, the market is now expecting at least one more hike in interest rates later this year.
Nasdaq Today
Notice on a daily chart how the Nasdaq and QQQ still are leading their 21-day exponential moving averages higher. That points to the strength of the confirmed uptrend.
The Big Picture on March 29 highlighted a key follow-through day that offered the earliest signal that institutions are coming back into the market and deploying capital back into stocks.
Meanwhile, the S&P 500 held on to a mild gain of less than 0.4% on Thursday, while the Dow Jones Industrial Average danced around its break-even line. The 30-stock blue chip gauge closed 4.81 points lower, or less than 0.1%, at 33,946.
The Dow Jones remains a laggard among the major indexes, up less than 3% so far this year.
At least six Dow Jones components rallied 2 points or more, including Leaderboard name Salesforce and beaten down biotech Amgen. The stock is trying to bust through upside resistance at its falling 50-day moving average.
The poor 29 Relative Strength Rating means Amgen has outperformed only 29% of all companies in the IBD database over the past 12 months. Generally, leading issues start their big price runs after already achieving relative strength vs. the rest of the market. Hence, prefer stocks that have an RS Rating of 85 or higher.
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Banks Underperform
Small caps slumped. The Russell 2000 fell 0.6%, looking poised for a fourth straight decline.
Banking issues had a lot to do with the malaise of the Dow industrials and smaller issues.
On Thursday, Reuters reported that banks are trying to fight back against looming international requirements that would raise costs for its non-interest-related products.
Bank regulators led by the U.S. Federal Reserve are finalizing the proposal, which would implement international capital standards agreed by the Basel Committee on Banking Supervision following the 2008-09 subprime debt debacle. Banks are notably worried by a proposal that would slap "higher capital charges on noninterest revenue, such as the fees lenders charge on credit cards or investment banking services," Reuters wrote.
However, Dow Jones component JPMorgan Chase, despite sinking more than 2 points on Thursday, is not triggering any key sell signals.
In fact, JPM stock continues to trade in the upper region of a new flat base that began forming in late April.
The flat base shows a mild decline of 8% from head to toe and offers a buy point of 143.37.
Underperforming JPMorgan
Bank of America, however, has proven much weaker than JPM. The former holds a poor Relative Strength Rating of 26 on a scale of 1 to 99.
In general, favor stocks, on the Nasdaq or on the NYSE, with an RS Rating of 80 to 85 or higher.
Bank of America's first-quarter results showed fundamental strength. Earnings jumped 18% vs. a year earlier to 94 cents a share on a 13% rise in revenue to $26.3 billion. However, Wall Street thinks profit growth will slow to a 7% increase this year to $3.42 a share, then dip 1% in 2024.
JPMorgan's earnings surged 37% in the first quarter to $4.10 a share on a 25% jump in revenue to $38.3 billion. That increase also marked the fourth quarter in a row of accelerating sales growth.
The Street forecasts 20% profit growth to $14.44 a share for the full year, then a 2% decrease in 2024.
Meanwhile, IBD's superregional bank industry group fell almost 2% on the day. None of its 10 components rose on Thursday. The median Relative Strength Rating within the group is an awful 15.
Smaller banks have especially done poorly since the government takeover of assets in failed lenders SVB Financial and Signature Bank of New York in March.
The SPDR Sector Regional Banking ETF sank 3.2% on Thursday, undercutting its 50-day moving average in rising turnover.
KRE is down almost 32% since Jan. 1.
Such terrible action reaffirms the importance of IBD's golden rule: keeping losses small.
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Beyond Nasdaq
Elsewhere, AMC Entertainment shares got trounced amid a dearth of news. But MarketWatch reported that its preferred equity units rallied sharply.
AMC stock is still trying to bottom out after virtually losing all of its gains so far in 2023. Shares fell as much as 10% on Thursday before cutting that loss minimally.
AMC stock trades more than 90% below its 2021 meme-stock bubble peak of 44.61.
Please follow Chung on Twitter: @saitochung and @IBD_DChung
