Indexes wavered right after the release of the Fed meeting minutes. Then in afternoon trading, the Dow Jones Industrial Average moved higher alongside the Nasdaq and S&P 500.
The Dow Jones industrials and S&P 500 rose 0.4%, while the Nasdaq gained 0.5%. Small caps struggled, with the Russell 2000 down 1%. Volume was lower on the Nasdaq and on the NYSE vs. the same time on Tuesday.
The Fed minutes showed that a deterioration in the inflation outlook meant the central bank had to take more aggressive action. The Fed also anticipated a rate hike of a half point or three-quarter points at this month’s meeting, the minutes said.
Energy stocks continued lower as oil fell another 2.8% to $96.64 a barrel, after steep losses in yesterday’s trading. The U.S. benchmark for crude oil fell below $100 a barrel for the first time since early May on Tuesday. The S&P 500′s energy sector was the worst performer Wednesday, as the Energy Select Sector SPDR (XLE) lost 2.6%. On the upside, the utility and real estate sectors outperformed.
Chevron (CVX) led the downside among Dow Jones components amid the slide in oil stocks. Shares are testing support at their 200-day line after falling below the 50-day line in June.
Managed care provider UnitedHealth (UNH) led the Dow with a gain of 1.3%. The stock regained its 507.35 double-bottom buy point after closing below it on Tuesday. Shares appear to be gaining support above the 50-day line. The health care firm is expected to report earnings on July 15.
Dow Jones tech giant Microsoft (MSFT) was also among stocks leading the upside as shares attempted to reclaim their 50-day line. Shares rose nearly 1% in afternoon trading.
Stocks Try To Break Out
A small number of stocks scored breakouts, including Wednesday’s IBD Stock Of The Day Evolent Health (EVH). Shares of the medical computer software firm rose nearly 5% in strong volume Wednesday and held above the 33.24 cup-with-handle buy point. In a good sign for the breakout, Evolent Health’s RS line traded sharply higher and hit a new high.
The company offers administrative software solutions to healthcare payers and providers. Year-over-year EPS and sales are improving, with a profit of 12 cents a share in Q1 vs. a year-ago loss of 1 cent per share. Revenue climbed 38% after single digit growth and a small decline in Q4. Evolent Health also holds the No. 1 rank among its peers in the Computer Software-Medical industry group.
On June 29, positive news boosted shares of EVH. The firm agreed to acquire IPG, a provider of surgical management technology for musculoskeletal conditions, from asset manager TPG (TPG). Potential contingency payments could raise the $375 million deal to $462 million.
Dollar Tree (DLTR) tried to break out above an oddly-shaped cup-with-handle base. Shares did not hold above the 166.45 buy point and volume on the breakout is weak. But the stock’s RS line hit new highs, a good sign.
Funko (FNKO) edged above a 25.18 cup-with-handle buy point. The stock traded just below the buy point but held a gain of 2%. The collectibles company is the world’s largest proprietor of licenses.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
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