Computer and consumer-oriented shares helped boost stocks today, but the Dow Jones industrial average lagged with a 0.2% decline. Boeing (BA) and Home Depot (HD) led a small posse of blue chip components that fell 1 point or more. NYSE-listed Grubhub (GRUB) soared.
Meanwhile, Apple (AAPL) continued to show market leadership with a gain of nearly 0.5% to 193.88, less than 1 point below the top of a new flat base. That marked a fourth gain in five days. Apple is up 14.5% since Jan. 1, beating all of the major indexes.
At around 2:30 p.m. ET, the Nasdaq composite held its morning gains and added a bit more. The premier index of growth stocks rose 0.7% to 7896, lifting its year-to-date gain to 14.4%. The S&P 500, up nearly 0.4%, shows a 5.8% advance since Jan. 1.
Apple’s five-week flat-base pattern forms part of a longer base-on-base pattern, which is bullish for growth investors.
The iPhone, MacBook and digital services innovator looks poised to post a sixth quarter in a row of double-digit profit growth. Analysts on consensus see earnings in the June-ended fiscal third quarter rising 31% to $2.18 a share on a 15% bump up in revenue to $52.34 billion.
The Nasdaq 100 rallied 0.7%, a day after hitting an all-time new high.
Hospital, cosmetics, security software, medical systems and shoe stocks paced the upside. Design software, computer networking, enterprise software, internet content and database software groups also did well, rising 1.5% or more.
The SmallCap S&P 600 slipped less than 0.2%, losing slight opening gains. But at 1044, the small-cap gauge remains a market leader, rising 11.5% since Jan. 1.
The defensive Dow utility average edged slightly higher as the yield on the benchmark U.S. Treasury 10-year bond cooled off, falling 2 basis points to 2.93%.
Crude oil rose. WTI near-term futures rallied more than 1.1% to $69.30 a barrel after data from the U.S. Energy Information Administration showed a 6.1 million draw in crude inventories in the latest reporting week. Gasoline inventories fell by 2.3 million barrels.
Grubhub Keeps Growing
Online and mobile food ordering service Grubhub soared more than 21% and reached as high as 137.89 after smashing Wall Street’s expectations once again. Earnings grew 92% to 50 cents a share, marking a fifth quarter in a row of accelerating EPS growth. Revenue soared 51% to $239.7 million, a quarterly best.
Accelerating profit growth to institutional investors is like honey for grizzly bears. The increasing pace of profit growth means that a company is doing something unusual and delivering great value to customers.
Grubhub shares are now up more than 26% after clearing a 106.80 handle buy point on a double-bottom base. The base began forming on March 13 and features two lows of 94.08 and 89.60. The middle peak of 105.68 in between the two lows produced a standard buy point of 105.78.
But handles, which represent a final mild shakeout of unhappy holders before a potential big move up in price, can also form on this winning chart pattern for growth stock hunters. Many of the eight bullish patterns feature a distinct buy point.
The other bullish chart patterns include the cup with handle, saucer base, base on base, ascending base, and high tight flag. Read more on these time-tested chart patterns at Investor’s Corner.
Leaderboard Stars
In Leaderboard, jewelry and fine goods marketer Tiffany (TIF) remains a market leader, rising 0.9% to 139.15 in quiet trade. The luxury retail play is climbing past a 138.07 buy point in a five-week flat base. The RS line has been sloping sharply higher for nearly two weeks and is close to reaching new high ground.
Leaderboard currently shows seven names that are either retailers or closely connected to the consumer spending sectors. They include China’s ZTO Express (ZTO), Lululemon (LULU) and Etsy (ETSY).
Lululemon announced a new CEO Tuesday, Sephora veteran executive Calvin McDonald.
Netflix (NFLX), which departed Leaderboard last week following a severe cut of the 50-day moving average, is rebounding slowly. The online video streaming juggernaut rose nearly 1% to 360.32 and is not too far below the 50-day line, which continues to rise.
See the 50-day moving average painted in red in both IBD charts and on MarketSmith. The charts of Leaderboard stocks get annotations in real time to help investors spot proper buy points, sell signals, and hints of strong institutional demand and heavy selling.
More Than A Flat Tire
On the downside, investors continued to sell shares of Fiat Chrysler (FCAU) following the surprise death of reform champion and former CEO Sergio Marchionne. The owner of Chrysler, Dodge, Jeep and Maserati auto brands dropped more than 14% to 16.42 in a ton of volume following dismal quarterly results.
Fiat’s earnings fell 9% to 72 cents a share, halting a five-quarter streak of double- to triple-digit gains, despite a 6% uptick in revenue to $33.85 billion.
After-tax margin jumped by an impressive 470 basis points to 19.3%. However, the automaker now has to deal with the uncertainty of U.S. tariffs on car imports, particularly those coming from Europe.
Fiat officials noted that while steel prices are secured by fixed-price contracts for this year, it would have to pay more in 2019 if current prices remain at elevated levels. New CEO Mike Manley cited slower demand from China in the quarter, ahead of a July cut in Chinese import duties. The company spent more on sales incentives and saw a larger than expected increase in unsold inventories, particularly with the Maserati luxury brand, according to Reuters.
In addition, the situation regarding the NAFTA trade agreement among the U.S., Canada and Mexico remains foggy. On Wednesday, President Trump met with European Commission President Jean-Claude Juncker to discuss ways to avoid an escalating tit-for-tat trade conflict.
