Fighting off a three-session slump, the stock market rallied on reports that U.S.-China trade talks were progressing and that the U.S. service sector continued to grow in October, though at a slower pace. But stocks ended off session highs. Dow Jones stocks, badly battered in the three-day plunge into red ink, showed renewed strength with Apple (AAPL), Johnson & Johnson (JNJ) and Goldman Sachs (GS) all making solid gains.
XWhile meeting Wednesday with German Chancellor Angela Merkel, President Donald Trump downplayed his remarks on Tuesday that a trade deal might have to wait until after the 2020 election, which sent markets reeling. "We will make a lot of progress" in trade talks, Trump told reporters.
The Dow Jones Industrial Average, down sharply in recent sessions, added 147 points, or 0.5%, after being up more than 250 points early in the day Wednesday. Nasdaq, also off sharply earlier this week, rose nearly 0.5%, also off its highs. The S&P 500 index moved up 0.6%, while the small-cap Russell 2000 led the way, adding 0.7%.
Volume on major exchanges fell from the same time on Tuesday. NYSE turnover dropped 5%, while Nasdaq trading fell just over 9%.
Among Dow stocks, both JPMorgan Chase (JPM) and Goldman Sachs snapped back from sharp declines on Tuesday. JPMorgan Chase stock rose 2% and Goldman Sachs stock moved up 1.7%.
Dow Regains Its Footing
Goldman Sachs stock broke out on November 27 from a flat base with a 222.34 entry, but the three day sell-off sent its shares down as much as 6% intraday, nearly triggering a sell signal. It's now just 2% from returning to the buy zone.
JP Morgan, which broke out of a cup base Sept. 12, is now 12% extended above its 117.34 buy point.
Another Dow name, Johnson & Johnson (JNJ), tacked on 1.6% as it broke out of a saucer-with-handle base above a 138.73 buy point. On the downside, Johnson & Johnson stock earns just a 63 Composite Rating score from IBD and its Relative Strength Rating is just 44, putting it in the bottom half of all stocks in recent price performance.
Apple, meanwhile, added 0.9% and is now extended about 19% above its breakout in September from a flat base with a 221.47 buy point.
Shares of oil companies got a boost after oil prices spurted 4.4% to above $58 a barrel, on news of a surprise drawdown in U.S. inventories and an apparent OPEC deal to cut its members' output.
Chevron (CVX) added 0.9% but remains in the bottom half of a flat base with a 127.44 buy point. Chevron stock also remains below both its 50-day and 200-day moving averages, with a weak 30 RS rating.
Also on the Dow, Exxon Mobil (XOM) rose 1.1%. Still, its stock remained in a lengthy downtrend, along with much of the rest of the oil industry.
Meanwhile, Nasdaq powerhouse Google-parent Alphabet (GOOGL) climbed 1.9% on news that CEO Larry Page and co-founder Sergey Brin would both step down in favor of Google chief Sundar Pichai. Google remains in a buy zone above its 1268.49 buy point out of a cup-with-handle base, after a breakaway gap in late October.
Elsewhere on the stock market, specialty retailers and some discounters also rebounded from recent market losses.
Stock Market: Retailers Bounce Back
RH (RH) stock, formerly known as Restoration Hardware, added 2.9% to push above the profit-taking zone 20% above its buy point. RH stock, with a 99 Composite Rating from IBD, broke out of a consolidation pattern on Sept. 11, and is extended from a rebound off its 50-day line.
Athletic and yoga wear retailer Lululemon's (LULU) stock rose 1.1%. Lululemon also has a 99 Composite Rating from IBD. It's now extended 11% from a flat base with a 204.54 buy point. It found support at the 50-day moving average line in early November, after briefly sending a sell signal. Since then, it's moved up strongly, with only five down days during the most recent 20 trading sessions.
Discounter Target (TGT) rose 0.4%, as it remains extended from a recent bounce off its 10-week line. Target stock has gapped up twice since late summer on bigger-than-expected EPS gains.
Innovator IBD 50 ETF (FFTY) gained 0.1%, well off session highs.
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