Stock Indexes Reverse Lower, But Breakouts Spread

U.S. stock indexes were mixed midday Wednesday, as a fourth consecutive up session, especially for the Nasdaq composite, looked unlikely. Volume was running higher on both major exchanges.

X Blue chips led the pack as the Dow Jones industrial average advanced 0.2%. The S&P 500 and the Nasdaq followed with losses of less than 0.1% and 0.5%, respectively.

Among IBD’s 197 industry groups, airline stocks were the worst performers. The airline stocks fell on fears of a price war.

The day’s best performer was the retail building products group.

Maintenance products provider W.W. Grainger (GWW) gapped up 15% in torrid turnover, marking a 52-week high.

The big cap stock cleared a 240.59 buy point in a cup-with-handle pattern. Grainger reported quarterly results that trounced the Street’s consensus estimate. Earnings rolled in at $ 2.94 a share, up 20% year over year and 33% higher than expected. Revenue rose about 7% vs. views for a 1% gain. The 7% revenue gain was the best in 13 quarters, according to William O’Neil + Co. data.

W.W. Grainger achieved the beats on revenue and earnings despite closing 98 branches in 2017. The company said an 11 percentage point increase from volume was the key driver behind the revenue gain.

Other stocks attempting breakouts midday Wednesday included cruise operators Carnival (CCL) and Royal Caribbean Cruises (RCL); defense contractor General Dynamics (GD); wood products REIT Weyerhaeuser (WY); gold miner Agnico Eagle Mines (AEM); wood products company Louisiana-Pacific (LPX); China online retailer JD.com (JD); Brazil bank Banco Bradesco (BBD); and regional bank Western Alliance Bancorp (WAL).

Financial News

Housing-related news was abundant.

The Mortgage Bankers Association reported mortgage applications rose 4.5% vs. 4.1% in the previous week. The Federal Housing Finance Agency home price index increased 0.4% in November vs. views for 0.5%. Existing home sales for December rolled in at a 5.57 million annualized rate vs. the consensus view for 5.75 million.

Meanwhile, the flash composite Purchasing Managers Index for January was pegged at 53.8 vs. views for 54. The gauge reflects data from about 1,000 manufacturing and service sector companies.

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