The big stock market indexes closed lower, as U.S.-China trade again roiled markets and despite mostly solid earnings reports. Software names fell as the sector was hit by a wave of analyst downgrades. Among those hit hardest: Workday (WDAY), ServiceNow (NOW), Atlassian (TEAM), Paycom Software (PAYC) and Adobe (ADBE).
XStock market damage was limited, however, by solid earnings reports and a likely UAW-General Motors (GM) labor deal. The S&P 500 and tech-heavy Nasdaq fell 0.2% and 0.3%, respectively, while the Dow Jones Industrial Average closed virtually unchanged (down less than 0.1%) and the small-cap Russell 2000 eked out a 0.1% gain. Still, as IBD's Market Trend indicates, the overall stock market remains in a confirmed uptrend.
Volume was mixed, based on early figures. NYSE turnover fell 6%, while Nasdaq rose 2%.
Among the damaged software stocks, ServiceNow plunged 7.2% after Morgan Stanley downgraded it. Workday plummeted 11.3% after a price downgrade by RBC and Adobe stumbled 2.4% after Citigroup cut its rating from buy to neutral.
The downgrades cast a shadow across the whole software sector, as Atlassian dropped 3.5%, Paycom fell 4%, Veeva Systems (VEEV) tumbled 4.2%, and Upland Software (UPLD) declined 2.1%.
The software sector has been a top performer in the last year, helping to push up both the Nasdaq and S&P 500.
But all was not doom and gloom on the stock market.
Bank of America (BAC) posted a solid 1.5% gain after reporting EPS and sales that beat Wall Street estimates. It broke into new high ground above a 30.42 buy point in a cup with handle base, but came off its highs late.
Chinese online gaming stock NetEase (NTES) added 3% as it broke out of a 24-week consolidation pattern above a 289. 79 buy point.
Stars On The Dow
Some traditional Dow names lent support to that widely watched index, with Johnson & Johnson (JNJ) tacking on 1.8%. Johnson & Johnson stock is near the bottom of a flat base with a 145.08 buy point. Its gain Wednesday pushed it over its 200-day moving average.
Walt Disney (DIS) (up 0.9%), McDonald's (MCD) (up 0.5%) and Goldman Sachs (GS) (up 0.5%) also posted gains. All are in short flat bases below their buy points.
Among the IBD 50 list of top growth stocks, a number posted solid gains.
Mortgage insurance provider Essent Group (ESNT) added 0.3% as it continues recent gains. After breaking out of a double-bottom base in late September, Essent stock is now just below its 50 buy point.
Infrastructure and 5G play MasTec (MTZ) stock rose 0.4%. With a 98 Composite Rating and No. 1 rank in its industry, MasTec is now in the profit-taking zone above a cup-with-handle base and 53.01 entry.
Aerospace, defense and communications heavyweight L3Harris Technologies (LHX) added to its recent luster, up 0.6%.
But, among exchange traded funds Innovator IBD 50 ETF (FFTY) fell hard. Dragged down by the big drops among software names, it declined 1.2%. It remains below its 200-day moving average line, a negative sign.
Stock Market: It's The Economy, Stupid
Markets are turning their attention to the broader economic picture, which remains mixed. Retail sales for September disappointed by declining 0.3%, the biggest drop since February, instead of rising by the same amount, as economists had forecast. But September sales remained up a solid 4.1% from the same month a year earlier.
While President Donald Trump said it was likely that "phase one" of the trade deal would be signed during the APEC meeting in Chile next month, farmers were said to be disappointed with the pace of Chinese agricultural purchases so far.
Despite that, influential Chicago Federal Reserve Bank President Charles Evans roiled waters by saying he didn't believe another Fed rate cut is needed. Markets have been anticipating further cuts by year-end, a big issue for investors.
Please follow Jones on Twitter at @IBD_TJones for more on growth stocks, financial markets and the economy.
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