The S&P 500 has been moving sideways for a few days, but the bigger story is the smaller stocks, notes Jon Markman of Pivotal Point.
People are piling into the shares of fast-growing small companies. The Russell 2000, a key proxy for these issues surged Tuesday by almost 1.9%. This is traders adding risk and it is extremely bullish.
I expect the benchmark S&P 500 will push to a new high at 4,238 is likely in the near term. The tech-heavy Nasdaq and Russell indexes should perform even better as bearish investors are forced to cover short positions. The first important support level is 4,155.
The Dow finished a touch above flat while the Nasdaq rose 0.6%. Energy stocks led the way while the healthcare sector posted the steepest decline.
Breadth favored advancers over decliners by a fat 4-1 margin and there were 265 new one-year highs vs. 45 new lows. Leaders on the new high list were Toyota, Blackrock, Intuit, Crown Castle, Ford, and Hershey, an eccentric set.
Dick's Sporting Goods (DKS) gained 17% after reporting record fiscal first-quarter results. "Outstanding sales and flow-through," said Wedbush analyst Seth Basham in a note. "The company is benefiting from strong demand for sporting goods as activities started during COVID persist, consumers began returning to team sports and consumers spent some of their fiscal stimulus on sporting good."
Clothing retailers broadly powered up following a string of upbeat quarterly reports. Abercrombie & Fitch (ANF) rose 7.7% and Urban Outfitters (URBN) 10% after reporting better-than-expected first-quarter results. American Eagle Outfitters (AEO) added 5.7%.
In contrast, Nordstrom (JWN) sank 5.8% after its earnings missed market expectations. "Another very tough quarter for JWN in 1Q, but unlikely to decelerate further in 2Q," Credit Suisse analysts said.
Elsewhere, Amazon (AMZN) gained 0.2% after striking a deal to buy MGM Studios for $8.45 billion to bolster its content. Ford (F) added 8.6% after the car maker said it expects fully electric vehicles to constitute 40% of its global output by 2030. General Motors (GM) and Tesla (TSLA) gained more than 2% each.
Learn more about Jon Markman at Pivotal Point.
