Dow Jumps 300 Points, Reaches Key Level As Stocks Expand Gains

Stocks extended gains in afternoon trading Monday, with the Dow Jones industrial average leading the way and topping an important level in its recovery.

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The Dow climbed about 300 points, or 1.2%, and traded back above its 50-day moving average. The Dow had closed below the 50-day line for about a month. The Nasdaq composite added 0.9% and the S&P 500 rose 1%. The S&P touched its own 50-day line. The small-cap Russell 2000 climbed 1% also. Volume was higher on the Nasdaq and close to Friday’s level on the NYSE.

Amazon.com (AMZN) is dropping plans to sell drugs to hospitals, CNBC reported. The news caused drug distributor stocks to rally. McKesson (MCK) jumped 6% and traded back above the 50-day moving average. Cardinal Health (CAH) rose 5% as it bounces from a four-month low.

Amazon.com shares were up 1% but continued to trade below the 50-day moving average.

The transportation sector led, with logistics, trucking and truck manufacturing among three of the four best-performing industry groups in today’s market. Airfreight was another top group.

J.B. Hunt (JBHT) jumped 6% in heavy trading after the company beat profit expectations earlier today. The stock climbed back above the 50-day moving average and is forming a base with a 126.59 buy point.

Banking firms continued their earnings announcements, with Bank of America (BAC) beating first-quarter earnings this morning. Earnings rose 51% to 62 cents a share. Adjusted revenue rose nearly 4% to $ 23.1 billion. Analysts had expected 59 cents on revenue of $ 22.907 billion. The stock reversed lower. A few other banks that reported last week also saw lackluster reaction from Wall Street despite seemingly good results.

Also in the financial sector, Charles Schwab (SCHW) reported EPS of 55 cents on revenue of $ 2.4 billion. Core net new assets rose 69% to $ 65.6 billion. Analysts expected 54 cents on revenue of $ 2.37 billion. The stock has been consolidating below the 50-day line for a few weeks.

Among defense contractors, United Technologies (UTX) rose 0.8%, Raytheon (RTN) 1.5% and Northrop Grumman (NOC) 0.7%. Raytheon climbed above the 222.92 buy point of a flat base but volume was fading. Northrop is forming a base with a 359.53 buy point. Boeing (BA) was flat after erasing an early gain.

Defense contractors have been seeing increased interest. Late Friday, the U.S., France and Britain launched a coordinated strike on Syrian chemical weapons facilities after accusing Syria of using such weapons on civilians.

Netflix Reports After Close

Netflix (NFLX) reversed modestly lower. Shares are extended after finding support in a pullback to the 50-day moving average. The video streaming company is reporting quarterly earnings after the close of today’s trading. Analysts expect earnings of 64 cents a share, up 60%.

The most recent earnings report in January sent shares soaring on strong subscriber figures. The subscriber numbers will be one of the main factors in today’s report.

Several optical stocks slid after the U.S. Commerce Department barred a Chinese company from importing to the U.S. Officials said the firm illegally shipped telecommunications equipment to Iran and North Korea.

Lumentum (LITE)tumbled 7%, Oclaro (OCLR) 14%, Acacia Communications (ACIA) 35% and Finisar (FNSR) 3%. Those stocks are in IBD’s fiber optics industry group, which had rebounded to No. 26 out of 197 groups. But only Lumentum has an IBD Composite Rating above 90.

Cal-Maine Foods (CALM) made a sound breakout. Shares of the egg producer topped the 48.50 buy point of a cup-with-handle base and volume was well above average. Cal-Maine has been profitable the past two quarters, after posting losses five of the past six quarters. Sales have rebounded sharply, up 42% in the February-ended quarter.

However, other stocks topped buy points in lackluster form. Financial consultants Booz Allen Hamilton (BAH) cleared a 40.35 entry in a flat base but volume was tracking about one-fourth lower than normal.

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