Consumer stocks led a bounce in the stock market Wednesday afternoon, although tariff worries hurt Dow industrials such as Boeing (BA), Caterpillar (CAT) and United Technologies (UTX).
The Nasdaq composite erased a drop of nearly 2% to rise 0.8%. The S&P 500 also reversed higher, up 0.6% and looking more sure-footed at its 50-day moving average.
The Dow Jones industrial average was up 0.5%. Some of its industrial companies fell after China announced new tariffs Wednesday on aircraft and other U.S.-made products. But losses shrank. Boeing and jet engine makers General Electric (GE) and United Tech were some of the Dow's largest decliners. The tariff news overshadowed Boeing's win of an order of 75 737 Max jets from India's Jet Airways.
Tariff troubles were at least part of the reason the transportation sector was the weakest Wednesday. Ship, rail, truck, airfreight and logistics were in the bottom 10 of 197 industry groups.
Small caps took part in the rebound, with the Russell 2000 rising 0.7%. Volume was lower on the Nasdaq and about the same on the NYSE compared with the same time Tuesday.
Select retail and some health care industry groups were up 2% to 4%. Food industries also led, despite that China plans duties on some food imports.
China also targeted U.S. auto manufacturers for retaliatory tariffs. Yet the industry group was the best performing on Wednesday. General Motors (GM) and Ford Motor (F) climbed 2% and 1%, respectively. Tesla (TSLA) reversed higher and surged 6%. All three stocks are trying to recover from big corrections.
Homebuilders, another proxy for U.S. consumer health, were one of the top industries in today's market. Lennar(LEN), the nation's No. 1 homebuilder by revenue, spearheaded the group's move after it beat profit expectations. The company says it remains "positive on the outlook of the housing industry in general." Lennar soared 9% in heavy volume, and rose above the 50-day line.
Today's only good breakout was in the consumer space, as well. Boston Beer (SAM) leapt above the 202.45 buy point of a cup-without-handle base in heavy volume. Cowen upgraded the stock to market perform from underperform Wednesday. Market risk is too high for new stock purchases, however.
U.S. oil prices fell 2% early but trimmed losses. Oil closed slightly lower at $63.37 a barrel. Worries of an escalating U.S.-China trade war weighed on futures. But the government reported that the nation's supply of crude fell last week.
Social media company Facebook (FB) came off session lows but was still down more than 1% in above-average volume. Shares remain depressed. Morgan Stanley cut its target price on Facebook to 200 from 230.
By: Juan Carlos Arancibia (Investor's Business Daily) .
Photo: The Sketch.
Review: Emerging Market Formulations & Research Unit, Flagship Records.