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Stocks Close Higher; E-Trade Hits Buy Point But Tesla Skids

Shares of E-Trade cleared a buy point Wednesday, but tech stocks were the winners in the market. (Roman Tiraspolsky/Shutterstock)

The stock market closed mainly higher Wednesday, although the Dow Jones industrial average was flat and the buying was concentrated in technology stocks.

X The Nasdaq led with a 0.7% increase thanks to strength in technology stocks. The composite, however, was unable to close back above the 50-day moving average.

The S&P 500 rose less than 0.2% and the Dow was a fraction lower. Small caps lagged, with the Russell 2000 was losing 0.4% at the closing bell.

Volume rose, which was a foregone conclusion following Monday's half-session in the U.S. stock market. Despite the higher close in the Nasdaq and S&P, breadth was negative. Losers  led winners by about a 3-2 ratio on the NYSE and Nasdaq.

Dow component Intel (INTC) led the industrials with a gain of more than 2%. But the chipmaker may be just touching bottom in a new base as it sits about 10% off a new high.

Intel underscored a solid day for chip stocks thanks to a combination of the strongest monthly chip report in years and other positive chatter. Semiconductor makers, chip equipment firms and chip designers were in the top six of 197 industry groups in Wednesday's trading.

Software and biotech also were industry groups that helped the Nasdaq outperform.

Chevron (CVX) and Exxon Mobil (XOM) were the Dow's weakest members as the energy sector tumbled broadly. U.S. crude oil fell more than 4%, wiping out three days of gains. The auto sector also lagged, with auto parts and automakers ranking low in the performance table.

Tesla (TSLA) skidded more than 7% in heavy volume after Goldman Sachs made bearish comments on the electric-car manufacturer. Tesla closed below the 50-day moving average for the first time since it broke out of a base April 3.

A few brokerages made new highs Wednesday, most notably E-Trade Financial (ETFC), which cleared the 38.71 buy point of a saucer base. But volume was flat, and it's not surprising to find institutional investors hesitating to buy while the market's direction remains uncertain.

E-Trade sharply improved its quarterly results last year, but now earnings are softening again. EPS growth has dropped from 92% to 59%, 53% and 12% the past four quarters, and analysts expect a 2% decline for the current quarter. For the full year, the consensus estimate is for a 5% rise in EPS, increasing to 17% in 2018.

Transportadora de Gas del Sur (TGS) broke out past the 17.45 buy point of an undefined base in heavy volume. The thinly traded stock is one of several Argentina-based stocks that have been acting well this month.

Transportadora de Gas is the largest natural gas production company in Argentina and has the most extensive gas pipeline system in Latin America. It bounced back from a loss in 2015 with a profit last year of 37 cents a share, and is expected to grow earnings 59% this year.

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