Major indexes, after catching their breath on Tuesday, struggled to hold on to early mild gains in Wednesday-morning trading.
Soft U.S. retail sales for February (down 0.1%, vs. the Econoday forecast for a 0.4% pickup), however, did not spur widespread selling.
At 11 a.m. ET, the Nasdaq composite was barely higher after opening with a gain of nearly 0.4%. The S&P 500 edged up 0.1% lower and the Dow Jones industrial average fell 0.3%.
Agricultural operation, meat, computer networking, movie, internet content, educational software and auto retailing stocks paced the upside with gains of 1% or more.
As noted in The Big Picture column, the major indexes on Tuesday logged a fresh distribution day, or bout of intense professional selling, as the Nasdaq fell 1% in higher volume vs. the prior session. The S&P 500 dropped 0.6% as NYSE turnover edged higher. But with most leading stocks acting all right and the two key indexes now having retaken their respective 50-day moving averages, the market’s current outlook remains at “Confirmed uptrend” for now.
Steel makers haven’t made much headway in the wake of historic tariffs of 25% set on steel imports by President Trump, although the White House has set exemptions for Canada and Mexico amid three-party talks to rethink the NAFTA trade treaty. However, the highly rated members of the group are still generally holding up and are beating the S&P 500.
U.S. Steel (X) fell more than 2% and is headed for a fifth down day in a row. Watch to see if institutional buying support can prevent a severe undercut of the stock’s rising 50-day moving average.
U.S. Steel holds a 92 RS Rating on a scale of 1 to 99. Shares are up 13% since Jan. 1, beating a 3.3% lift by the S&P 500.
Wall Street expects U.S. Steel, which has a $7 billion market value and is thus a midcap firm, to increase earnings by 98% this year to $3.84 a share, then boost earnings by 17% in 2019 to $4.50.
Tenaris is slightly below a 36.43 buy point in a long, deep cup with handle.
This week’s pullback looks normal so far, given that Tenaris has rallied nicely for four weeks in a row.
Notice on a MarketSmith weekly chart how in the week ended Feb. 9, while IBD’s current outlook shifted to “Market in correction” in The Big Picture column, how Tenaris respected its 40-week line. That’s bullish.
The Street sees the expert in oil and gas well steel pipes increasing earnings 43% to $1.10 a share this year and another 47% in 2019.
Meanwhile, China Lodging (HTHT) dropped more than 10% to 131.70 in heavy turnover and gave back all of its year-to-date gains and then some. But the stock is trying to hold near the 130 level, where it found institutional buying support during the early February market sell-off. The stock is also trading above its long-term 200-day moving average for now.
The hotel chain operator late on Tuesday notched an 86% jump in Q4 profit to 52 cents a share, accelerating from EPS gains of 19% and 58% in the prior two quarters, on a 42% rise in revenue to $340.1 million, the second highest for any quarter.
After-tax margin jumped 290 basis points to 11.2%.
Through Tuesday’s close, China Lodging ranked No. 10 in the IBD 50. Shares had already made a stunning climb, rising more than 400% from a first-stage breakout from a cup without handle at 33.10 during the week ended March 18, 2016.
In other markets, crude oil was drifting near break-even after a report showed weekly U.S. inventories rose to 5 million barrels in the week ended March 9. WTI slipped 0.1% to $60.64 a barrel.
The yield on the benchmark U.S. Treasury 10-year bond fell to around 2.83%, off from a Feb. 21 high of around 2.94%. The Federal Reserve meets on interest rates on March 20-21 and is widely expected to increase the fed funds rate by a quarter point to a range of 2.25%-2.5%.
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