By William Watts and Chris Matthews, MarketWatch
Dow back above 27,000 for first time since July; S&P500 above 3,000 for first time six weeks
U.S. stocks closed higher Wednesday as investors eyed momentum-driven and technology shares again, along with small-capitalization stocks, while awaiting further clarity on central bank stimulus plans and international trade negotiations.
How are the major benchmarks performing?
The Dow Jones Industrial Average rose 227.61 points, or 0.9%, to 27,137.04, closing above 27,000 for the first time since July. The S&P 500 index advanced 21.54 points, or 0.7%, to 3,000.93. The Nasdaq Composite index gained 85.52 points, or 1.1%, to 8,169.67.
The Dow notched its sixth-straight gain, while the S&P 500 closed higher for the fifth time in six sessions. The Nasdaq snapped a three-day losing streak.
Wednesday's action leaves the Dow and S&P just 0.8% from their record closes, while the Nasdaq remains 1.9% from its all-time closing high.
What's driving the market?
Wednesday's action saw the waning of a rotation out of market-leading momentum shares and tech stocks into previously out-of-favor value stocks, as momentum stocks found their footing again in afternoon action following early-morning losses. Stocks in the information technology sector also stabilized, rising 1% after three-straight losing sessions.
Momentum strategies focus on buying shares that have previously gained and have offered outsize returns for much of the current bull market, while value shares have lagged behind.
The iShares Edge MSCI USA Momentum Factor ETF (MTUM) rose 0.3%, Wednesday after being down as much as 1.1%, while the iShares Edge MSCI USA Value Factor ETF (VLUE) advanced 0.8%. So far this week, MTUM is down 2.8% versus a 4.1% rise for VLUE.
Also see:Energy, financial stocks soar: Oversold bounce or the beginning of a breakout? (link)
Small-capitalization shares also rallied, with the Russell 2000 rising 2% Tuesday, accelerating a trend that has left the index up 4.6% so far this week versus a 0.5% rise for the S&P 500 index.
"From a technical perspective, the rally in small-caps is the most important development of the week, so far, as the Russell 2000 hit a five-week high outperforming its large-cap peers," said Ken Berman, strategist at Gorilla Trades, in a note.
The Russell 2000 has lagged behind the broader market for several months and remains more than 10% below its all-time high despite a recovery over the past couple of weeks, he said, noting that this weeks' move has seen it move back above both its 50- and 200-day moving averages -- viewed as measures of short and longer-term momentum, respectively -- for the first time since late-July. If the Russell remains "relatively strong," major indexes could be on track for a round of all-time highs, he said.
Meanwhile, U.S. Treasury prices remained under pressure Wednesday, driving up yields, after an August rally. The rebound in yields reflected easing worries over the U.S.-China trade battle, at least for now, as officials from both countries prepare for renewed talks. Potentially boosting sentiment Wednesday was a Chinese decision to exempt some products (link)from retaliatory import tariffs announced in August. (link)
Investors are also looking for the European Central Bank to deliver an interest rate cut and potentially other measures when policy makers meet Thursday, while the Federal Reserve is expected to deliver another rate cut when it meets next week.
President Trump renewed his calls for the Federal Reserve to aggressively cut interest rates, arguing that the Fed Funds rate should be cut "to zero or less."
U.S. wholesale price rises accelerated slightly in August (link), with the producer price index rising 0.1%, versus a flat reading expected by economists polled by MarketWatch. Wholesale price growth rose year-over-year at a 1.8% rate, versus a 1.7% advance in July.
Wholesale inventories rose 0.2% in July (link), while the ratio of inventories to sales, or the number of months needed to sell remained steady at 1.36 compared to June, though it is up from 1.27 one year ago.
Which stocks are in focus?
Shares of GameStop Corp. (GME) tumbled 9.8% after the video-game retailer reported a second-quarter loss of more than $400 million (link) Thursday evening, driven largely by a $363.9 million goodwill impairment charge, while missing expectations for earnings and sales when excluding the one-time cost.
Amazon.com Inc. (AMZN) shares were in focus Wednesday, after a report (link) that the FTC is investigating Amazon's third-party seller marketplace to determine whether it is using its market power to harm competition. Shares rose 0.1%.
Shares of ride hailing companies Uber Technologies Inc. (UBER) and Lyft Inc. (LYFT) were in focus Wednesday after the California Senate passed a bill (link) that would likely force the companies to classify their drivers as employees, rather than contractors. The bill is expected to be soon signed into law by Gov. Gavin Newsom. Uber shares rose 1.5% and Lyft shares added 2.4%
How are other markets trading?
The yield on the 10-year U.S. Treasury note rose 4.2 basis points to 1.744% Wednesday, extending (link)a selloff in bonds that has (link) driven the 10-year yield 12.2% higher week-to-date. Bond prices move inversely to yields.
In commodities markets, the price crude oil fell 2.5% to $55.96 a barrel, on weekly data showing a drop in U.S. inventories (link) amid reports that Trump discussed easing of sanctions on Iran (link) in a move to secure a meeting with Iranian president Hassan Rouhani later this month.
Gold prices edged 0.3% higher to $1,504 an ounce. The U.S. dollar , meanwhile, edged higher against a basket of its peers.
In Asia overnight Wednesday, stocks were mixed, with the China CSI 300 l losing 0.7%, while Hong Kong's Hang Seng index added 1.8% and Japan's Nikkei 225 rose 1%. European shares closed higher Wednesday, with the Stoxx Europe 600 up 0.9%.
(END) Dow Jones Newswires
September 11, 2019 16:26 ET (20:26 GMT)Copyright (c) 2019 Dow Jones & Company, Inc.