This was a hot and promising sector for 2024. That's over, says one strategist. For now.

By Barbara Kollmeyer

Critical information for the U.S. trading day

Much chatter has been devoted to what's needed for the U.S. stock market rally to continue this year. A big one on the to-do list? Seeing gains spreading beyond the "Magnificent Seven" tech stocks, which themselves have not been moving in tandem.

Simply, the other 493 stocks in the S&P 500 index, as my Missouri-born parents were fond of saying, when someone or something was moving too slowly: "Get a horse!" Some stocks seem to be waking up - for example the S&P 500's healthcare sector XX:SP500.35 is up nearly 7% so far this year, a respectable return versus the main index's 9% gain.

As The Wall Street Journal recently pointed out, the sector has seen its best start to 2017, with investors piling in, even if healthcare has historically seen weaker performances in election years.

But our call of the day from Mark L. Newton, head of technical strategy at Fundstrat, is pulling the plug on that enthusiasm, as he cuts the sector to neutral from overweight.

Healthcare stocks "failed to follow-through on the initial bounce off November, which successfully broke out above this sector's seven-month downtrend vs. the S&P 500," he tells clients in a note.

In Newton's view, the January 2024 breakout has proven short lived and healthcare - the biggest sector behind tech - has underperformed all other 10 sector equal-weighted and market-cap weighted exchange-traded funds in a rolling one-month period ending 3/26.

"Overall, I feel like a lesser weight is correct in healthcare, technically speaking, until more evidence of this group bottoming out occurs," he said, though stresses this isn't a long-term bearish call.

"June and July historically are quite positive for healthcare seasonally speaking, so I anticipate that any absolute and/or relative weakness into late April and/or May might prove to be a better time to revisit this sector," he said.

So look for underperformance over the next month against the broader market, says the strategist. Sell in May and go away seems like one classic piece of investing advice that may not apply to those stocks.

Read: How has this $25 billion fund beaten the S&P 500? Patience - and preparing for 'the next big thing'

Markets

U.S. stocks rose Wednesday as benchmark Treasury yields BX:TMUBMUSD10Y eased. Oil prices (CL.1) were softer, while the dollar DXY was up. The Japanese yen (USDJPY) fell to nearly 152 per dollar, its weakest since 1990, prompting speculation the authorities in Tokyo may intervene to support the currency.

Follow MarketWatch's Live blog with all the latest U.S. market action for Wednesday.

The buzz

There are no top-drawer U.S. economic data releases on Wednesday, but there is some Fedspeak, with Fed Gov. Christopher Waller making comments on the economic outlook at 6 p.m. Eastern. The Treasury will auction $43 billion of 7-year notes at 1 p.m.

S&P Global has cut its outlook to negative from stable on regional U.S. banks First Commonwealth Financial (FCF), M&T Bank (MTB), Synovus Financial (SNV), Trustmark (TRMK) and Valley National Bancorp (VLY). The agency cited commercial real estate exposures.

GameStop shares (GME) plunged 14% after the former meme-stock darling delivered a miss on fourth quarter earnings and revenue.

After Monday's blockbuster session, Trump Media & Technology Group (DJT) shares were up another 10%. Elsewhere, former President Donald Trump is now selling bibles.

Read: Trump merges MAGA and Wall Street with his 'supercharged meme stock'

Shares in Robinhood Markets (HOOD) are up 3% after the trading app launched its first credit card.

All six missing workers on the collapsed Baltimore bridge are presumed dead, say authorities. Barclays has estimated reinsurers and insurers could face up to $3 billion, perhaps more in claims over the accident. Read more in MarketWatch's Live blog

Best of the web

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American business stalls in China. In graphs.

The chart

Tuesday's late-day equity selloff was caused by a $5 billion order imbalance to the sell side, according to Michael Kramer, analyst at Mott Capital Management.

"These orders for the closing cross [at 3:50 p.m.] can start being posted at 2 p.m. ET and build throughout the afternoon, so it is not surprising that the market started selling off ahead of the release of the cross," said Kramer, who notes that was the second straight day of a hefty sell imbalance.

"This marks the second day in a row with a significant sell imbalance, following yesterday's [Monday's] nearly $2 billion that came for sale," he added.

Top tickers

Here were the most active stock market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   GME     GameStop 
   DJT     Trump Media & Technology Group 
   RDDT    Reddit 
   NIO     Nio 
   AAPL    Apple 
   SMCI    Super Micro Computer 
   AMD     Advanced Micro Devices 
   PLTR    Palantir Technologies 

Random reads

Everything is not awesome for this California police department.

Pedalo bears.

Controversial Titanic floating door prop sells for $718,750.

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-Barbara Kollmeyer

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03-27-24 1051ET

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