Stock Market Reverses Modestly Higher As Retail, Metal Stocks Stand Out

The stock market reversed higher Thursday morning, a small increase to its big two-day rally. Some retail, metal and energy stocks showed renewed strength.

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The S&P 500 opened 0.5% lower but was up 0.2%. The Nasdaq composite also erased early losses and climbed 0.3%. The Dow Jones Industrial Average was nearly flat.

Volume fell on the NYSE and Nasdaq compared with the same time on Wednesday.

Switch (SWCH), a data center provider, broke out of a cup-with-handle base in heavy trading. Shares are in buy range from the 27.85 buy point to 29.24. The relative strength line is near highs. Switch has a decent Composite Rating of 88, despite that earnings declined the past three quarters.

Retailers rose after earnings reports.

Dollar General (DG) climbed 1.6% after the discount chain met profit estimates with earnings of $2.57 a share and revenue of $8.7 billion. Same-store sales fell 1.4%, below views. The stock is forming a cup base with a 240.24 buy point.

Williams-Sonoma (WSM) leapt more than 8% despite a mixed holiday-quarter report. Earnings of $5.41 a share beat expectations, but sales of $2.5 billion missed estimates. Williams-Sonoma also raised its quarterly dividend 10%, to 78 cents a share, and raised its stock buyback to $1.5 billion from $700 million remaining in a prior program.

IBD 50 Outperforms Stock Market

The Innovator IBD 50 ETF (FFTY) outperformed with a 0.7% increase led by energy, metal and agricultural stocks.

Commercial Metals (CMC) fell 1.1% after the company reported better-than-expected February-quarter earnings and revenue early today. The steel and metal products maker’s results came as steelmakers benefit from firm pricing due to the Russia-Ukraine war. The stock is extended after breaking out of a cuplike base with a 38.82 buy point on Feb. 28.

Asian stocks extended their rally after Chinese economic officials Wednesday offered encouraging comments.

Hong Kong’s Hang Seng Index soared 7% for a two-day surge of 16.8% — the best two-day rally in the index since February 1998, according to Dow Jones Market Data. The Shanghai Composite rose 1.4%, bringing its two-day rally to 4.9%. That’s the best two days since July 2020. The Tokyo Nikkei 225 jumped 3.5% Thursday.

But many Chinese stocks fell in U.S. trading. KraneShares China Internet ETF (KWEB) lost more than 6%, and iShares China Big Cap ETF (FXI) fell more than 3%.

Alibaba (BABA), Baidu (BIDU), JD.com (JD), VipShop (VIPS) and Li Auto (LI) slid 4% to 8%.

Stock Market Takes In Housing Starts, Jobless Claims

In economic reports, housing starts jumped 6.8% in February to 1.769 million at an annualized rate. Economists expected 1.7 million, according to Econoday. The February number was the highest since the summer of 2006. Pandemic-related worker absenteeism eased, and January’s extreme cold spell ended, noted BMO Capital Markets economist Priscilla Thiagamoorthy.

Building permits fell 1.9% to 1.859 million annualized, the first decline in five months.

“Despite a slew of headwinds, including rising material costs and supply shortages, we expect homebuilding to stay at healthy levels this year. Housing demand remains strong, even with higher mortgage rates, and construction activity is supported by a shortage of previously owned homes available in the resale market,” she added.

Jobless claims fell to 214,000 last week from 229,000. Economists expected 221,000 according to Econoday. The latest figure is below the 2019 average of 218,000 as the job market continues to tighten, Thiagamoorthy said.

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