U.S. equity markets closed sharply higher Wednesday as an early rebound in crude oil prices broadened into a solid advance that handed the Dow its fifth straight gain and the Nasdaq a fourth win in a row.
More than 75% of the 197 industry groups tracked by IBD moved higher in a session that left the Dow Jones industrial average ahead 0.8%. The S&P 500 grabbed a 1% gain. The Nasdaq Composite also climbed 1%. Exxon Mobil (XOM) was one of five Dow stocks to rise more than 2%. Walmart (WMT) and Walt Disney (DIS) staked out the bottom of the list. Both the Dow and the S&P 500 surfaced for their first real breath of air above their 50-day moving averages since April 18.
XCrude oil prices easily kept their 42-month highs, while the yield on the 10-year Treasury note remained steady at 3%. Stocks scoring breakouts Wednesday included Chevron (CVX), Royal Dutch Shell (RDSA), Occidental Petroleum (OXY) and Electronic Arts (EA), among others.
Chevron, Occidental Break Out
Energy issues drove the session. Exxon ran near the head of the Dow. Chevron, Shell and Occidental Petroleum scored breakouts. Oil and energy industries made four of the day's seven biggest advances among the 197 industry group tracked by IBD.
The price of West Texas intermediate crude settled up 3% at 71.14. That took back more than the ground it lost Tuesday and marked its first close above $71 a barrel since November 2014. Oil prices had turned volatile on Tuesday's news that the U.S. had exited the Iran nuclear deal. A new round of sanctions could take a share of Iranian oil off the international market. Iran, the world's fifth largest oil producer, exported 2.48 million barrels per day in April.
Crude oil prices received an added boost Wednesday morning, after the Energy Information Administration reported a 2.2-million-barrel draw on U.S. oil stockpiles last week vs. expectations for a build of 160,000 barrels.
The highest flying oil name among S&P 500 stocks, Occidental Petroleum (OXY) snapped more than 5% higher. That effectively marked a breakout above a 78.19 buy point in a cup-without-handle base. Occidental reported a Q1 earnings gain of more than 500%, with revenue rising 28%. Both were well above expectations. The stock rose narrowly above the proper buy point in moderate trade Tuesday.
On the Dow, Chevron's heavy volume, 1.6% gain sent shares into a buy range above a 128 buy point in a five-month cup-with-handle base.
Royal Dutch Shell gapped up to a 3.3% win, breaking out past a 71.79 buy point in a cup-with-handle base.
Airline stocks dived, as investors struggled to price in increased fuel costs. American Airlines Group (AAL) dropped 3.5%. Delta Air Lines (DAL) shed 1.5%. United Continental Holdings (UAL) slumped 3%
Walmart Chases Amazon In India; Disney Slips On Q2 Results
Walmart was the Dow's stumbling block, ending down 3.3% after announcing it would pay $16 billion to acquire a 77% stake in India's largest e-commerce name, Flipkart. The big box retailer's largest acquisition to date ratchets up Walmart's e-commerce war with Amazon.com (AMZN) in a country where 35% of the country's 1.3 billion citizens use the internet. Wednesday's loss ended Walmart's effort to retake its 50-day moving average, sending the stock to its lowest level since October.
Disney shares fell 1.8%, back below their 10-week moving average. The House of Mouse reported a solid fiscal Q2 sales and earnings beat late Tuesday, but ESPN ad revenue, theme-park resort reservations and broadcast subscribers all declined. Disney shares are trading tightly, below the 50-day and 200-day lines, in a five-month consolidation.
IBD Leaderboard name Planet Fitness (PLNT) pared a 9% decline to less than 5% at the close. A 42% EPS gain and a 33% jump in Q1 revenue beat analyst expectations. The stock tumbled below its 10-week moving average in heavy trade, which might be a defense-type sell signal following a long run-up in price. The stock fell more than 8% below a 40.14 buy point from a flat base. That triggered the automatic sell rule.
Online travel site TripAdvisor (TRIP) spiked 22.8% to top both the Nasdaq 100 and the S&P 500. The company late Wednesday reported a 25% EPS gain in its first quarter, its first earnings advance in nine stanzas. Revenue rose 2%. Both numbers were above analyst estimates. The huge volume move sent shares narrowly above a 47.12 buy point in a bottoming base.
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