The Nasdaq composite kept moderate gains, rising around 0.3% amid a rocky session for the semiconductor sector. Intel (INTC) dragged on the Dow Jones Industrial Average with a roughly 2% loss. Defensive stocks and some banks slumped in the current stock market.
At around 2:15 p.m. ET, the Dow Jones edged nearly 0.2% lower. The S&P 500 did not fare much better following the three-day Memorial Day weekend, retreating 0.1%. Yet Innovator IBD 50 (FFTY) ETF outperformed, rising nearly 0.7%.
At 32.94, the growth stock-focused exchange traded fund held a 19.2% gain since Jan. 1. At 2826, the S&P 500 is up 12.7%.
VanEck Semiconductor (SMH) dropped as much as 1% for its fourth straight decline. At 98.92, SMH still holds a beefy gain of 13.3% since Jan. 1, but is down 7% since April 1.
Utility Stocks Fall Harder Than The Dow Jones Industrials
The Dow Jones utility average fell nearly 0.8%. Long-term interest rates in the U.S. remain low. The yield on the benchmark Treasury 10-year bond sank to 2.26%, down 6 basis points and below 3-month T-bills at 2.34%.
Action at the industry group level remained mixed in the afternoon.
While tobacco, periodicals, dairy, truck, packaged food and super regional banks fell 0.9% or more, the indexes' paltry gains masked strength in database, enterprise and gaming software firms. These three industry groups rose 1.7% to 2.1% on a price-weighted basis.
Software remains No. 1 in the IBD stock research tables for mid- and long-term blended relative price performance.
Within that sector, IBD Leaderboard member HubSpot (HUBS) outperformed with a gain at one point of more than 2.5% in light trade.
Notice how in recent weeks the stock's relative strength line has stretched into new high ground. This means HubSpot is outperforming the S&P 500. The RS line is drawn in blue in all IBD charts and in MarketSmith.
Even if a stock falls in price, if the S&P 500 falls harder, then the RS line will rise.
The specialist in inbound marketing and email management for small and medium size businesses joined the Leaders list on an exercise of a call option with a 180 strike after reporting solid Q1 results on May 7 (earnings up 140% to 36 cents a share, revenue up 33% to $151.8 million).
The proper buy point in HubSpot's recent flat base was 180.10, 10 cents above the base's left-side peak.
The 5% buy zone in HubSpot goes up to 189.11.
Read more about the elements of a good flat base in Investor's Corner.
Beyond The Dow: Consumer Names Rebound
Yeti (YETI), Brazil's PagSeguro Digital (PAGS), Mastercard (MA) and Argentina-based e-commerce and payments giant MercadoLibre (MELI) also showed positive action following a better-than-expected reading on May consumer confidence by the Conference Board. The consumer confidence index hit 134.1, smashing the Econoday forecast of 129.9. The data also supports a big rise in economic optimism as measured by the IBD/TIPP Poll for May.
Mastercard and MercadoLibre are current members of IBD Leaderboard. The latter also recently joined SwingTrader.
According to IBD Stock Checkup, Mastercard earns a 98 Composite Rating on a scale of 1 (the worst) to 99 (the best) for excellence in fundamental, technical and fund sponsorship factors. The stock is currently extended in price after bolting past a 210.01 buy point in a base that features the elements of a double bottom. Watch for a potential new follow-on buy point to emerge, including a rebound off the 10-week moving average in active turnover.
Anaplan (PLAN) also is bucking the market correction. Shares in the cloud-based organizational planning platform raced out of a nine-week cup with handle with a 40.10 buy point, surging more than 17% in volume running six times its 50-day average. The mid-cap growth stock reported a net loss of 16 cents a share, better than the Wall Street consensus estimate.
Revenue grew 47% to $75.8 million. That marked the company's seventh quarter in a row of 40%-plus gains in the top line vs. year-ago levels.
An Authentic IPO Leader
Yeti, maker of ultra-premium camping and outdoor gear and thermoses, has fallen as much as 33% from its all-time high in the space of weeks. Steep fall indeed. But that's actually normal for leading growth stocks after a superb short-term run.
Yeti, which went public on the NYSE at $18 a share in October, muscled out of a solid cup with handle base at 19.30 on a bullish Valentine's Day earnings report, and rushed 89% higher in just 11 weeks.
The current base may or may not end up being a new cup. But in most cases, a 33% correction is the largest allowable decline in a cup base or a double bottom.
Notice how the stock continues to trade beneath its 50-day moving average, drawn in red in all IBD charts. A strong stock will rebound back above the 50-day line. Yeti's 50-day moving average has crested and may be flattening out.
The Street sees the Austin, Texas-based company growing full-year earnings 17% to $1.05 a share this year and another 24% in 2020.
Yeti, as a small cap leader, has a market value of $2.3 billion, 84 million shares outstanding and a float of 35 million shares.
China Trade War Issues Linger
China's government continues to show defiance but also a willingness to keep talking on settling the trade dispute in the wake of President Trump's decision to levy stiff tariffs on hundreds of billions of dollars' worth of Chinese products imported into the U.S.
At a May 22 media event in Los Angeles ahead of the 4th Annual China-California Business Forum scheduled for June 5 in downtown LA, Consul General Zhang Ping remarked, "the trade friction is against the interests of both China and the United States and is harmful to both economies. It will disrupt the international economic order and supply chain. A trade war makes no winner."
"We have also taken a very constructive approach throughout the negotiation. Right now it is still our intention to get the problem solved through dialogue and consultation," Zhang added.
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