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Stocks Not Getting Liftoff; Dow Jones, Bank Stocks Lag – Investor's Business Daily

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Stock indexes battled just above and below the breakeven line Thursday in late morning trade. A handful of bank stocks reported earnings this morning with mixed outcomes.




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The Nasdaq and S&P 500 inched up 0.2%. Blue chips weakened as the Dow Jones industrial average slipped 0.1%. Small caps rose 0.3% in the Russell 2000.

Volume fell on both major exchanges, perhaps a welcome development a day after the market’s stalling action Wednesday. Stalling involves a lack of price progress in rising volume. It points to institutional selling.

Spotlight On Bank Stocks

This week has served as a spotlight on the bank stocks. Citigroup (C) topped the Street’s number on earnings Monday and is now up 9% so far this week. JPMorgan Chase (JPM) missed estimates Tuesday but is up 2.5% for the week. On Wednesday, Bank of America (BAC) and Goldman Sachs (GS) soared on robust earnings. The two are up 10% and 11% for the week, respectively.

Early Thursday, two superregional banks reported. BB&T‘s (BBT) earnings came in 1% above views. The stock then rose 0.5% in heavy volume. KeyCorp (KEY) topped earnings by about 2%, and then sank 3% in heavy volume.

Regional bank Commerce Bancshares (CBSH) beat earnings views by 2% and then rose 1.5% in fast trade. Home Bancshares (HOMB) missed earnings by almost 9% and then skidded about 7% in heavy volume. M&T Bank (MTB) topped estimates by about 10% and then gapped up 4% in strong volume.

Buffalo, N.Y.-based M&T Bank’s final result for 2018 was earnings growth of 45%, the best since 1999.

Morgan Stanley (MS) had a rough reception Thursday and may have set the tone for the other banks. The money center missed earnings by 18% and then dived about 5%.

The market’s reaction to bank results has been mostly in line with results. Misses are bringing punishment and strong beats are being rewarded.

Going into Thursday’s session, the bank sector was up 6.83% in the first 11 sessions of 2019. Only one sector has had a faster start. Energy is up 8.09%.

The problem with bank stocks is that few have formed bases. Trend lines could offer an early, alternative entry for interested buyers.

Strength In Software, Retail

Apart from banks, the software and retail sectors have done well so far this year.

The restaurant group is up 10% since the Christmas Eve close. Many restaurant stocks are further along in their patterns than other groups. Going into Thursday’s session, the restaurant group was No. 42 among 197 industry groups.

Chipotle Mexican Grill (CMG) remains in the 5% buy zone from a 501.08 buy point. McDonald’s (MCD) is trying to climb above its 10-week moving average as it forms a shallow pattern. Starbucks (SBUX) is aiming to retake its 10-week line as it works on a pattern that is 12% deep. Denny’s (DENN) is trying to retake an 18.26 buy point.

In the software space, Leaderboard name Coupa Software (COUP) rolled 4% higher in heavy volume. The business software provider is consolidating. The stock’s relative strength line is near a high, which is bullish.

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