The Dow Jones Industrial Average rallied after President Joe Biden met with top CEOs, spurring a GOP debt ceiling offer. Microsoft (MSFT) managed to gain, while Dow Inc. (DOW) fell amid a new plan to cut emissions. General Motors (GM) closed lower despite a sales pledge, while Tesla (TSLA) fought its way out of the red.
Meanwhile a cluster of stocks were showing strength, even as the broader stock market struggled. Paychex (PAYX), Bank of New York Mellon (BK), American Express (AXP) and American Software (AMSWA) all flexed their muscles.
There was mixed economic news earlier on Wednesday. The Mortgage Bankers Association reported mortgage applications down 7% last week. Refinance activity fell 10%, to its lowest level in three months.
However the ADP Employment report estimated private payrolls rose by 568,000 in September which topped estimates for 428,000. It’s also up from a revised 340,000 in August. The leisure and hospitality sector did the most hiring, adding 226,000 workers. Manufacturing added 49,000 new employees.
Biden Meets CEOs; McConnell Offers Debt Deal
President Joe Biden held a meeting with some of the top bosses in corporate America as he tried to rally support for raising the debt ceiling.
At the meeting, Dimon warned that default could undermine the credibility of America around the world, and said it could cause a “complete catastrophe.”
“This is a time I think we should show American competence, not American incompetence,” he said.
Republicans had been standing firm in the debt ceiling fight. They want Democrats to use reconciliation to pass the measure without GOP support in the Senate.
The stock market turned higher after Senate Minority Leader Mitch McConnell offered a short-term suspension of the U.S. debt ceiling to avoid a national default.
“We will also allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount,” McConnell said.
Nasdaq Rallies, Small Caps Lag
The Nasdaq managed to shake off early losses to turn in a gain of around 0.5%. Chip stock Marvell Technology (MRVL) was the top gainer, rising more than 7%, after the company raised its growth outlook at its Investor Day event.
The S&P 500 also rallied, rising about 0.4%. Enphase Energy (ENPH) saw some gains melt away, but still led with a gain of more than 4%.
U.S. Stock Market Today Overview
Last Update: 4:04 PM ET 10/6/2021
S&P 500 sectors were mainly green, with utilities and consumer staples turning in the best gains. Technology was also showing strength. Materials and energy were the worst laggards.
While other indexes were fighting back, small caps were bitten by the bears. The Russell 2000 fell 0.5%.
In contrast, growth stocks were outperforming. The Innovator IBD 50 ETF (FFTY) closed up 0.7%.
Microsoft Stock Leads As Dow Jones Gains
The Dow Jones Industrial Average managed to rally out of the red, turning in a modest gain of about 0.3%.
It rose just over 100 points after earlier giving up around 450 points.
Leaderboard stock Microsoft was the top performer, closing with a gain of 1.5%.
The software stock is forming a new flat base but is currently well shy of the ideal buy point of 305.94
Meanwhile Dow Inc. was the biggest laggard. It closed down more than 3% after it outlined a path to zero-carbon emissions at its investor day. The firm also shared plans to drive earnings growth.
GM Stock Falls As Tesla Stock Powers Higher
GM stock closed lower even after the firm outlined new revenue targets.
General Motors revealed it is aiming to double annual sales to $280 billion by 2030 as it transitions to all-electric vehicles.
The firm will also look to boost profitability by leveraging software and data-focused operations
“When you look at all of the investments we’ve been making for five years plus, that’s what positions us today to really be in execution mode,” CEO Mary Barra said.
GM stock was off highs, falling back below its 200-day line as it closed down 0.8%.
It is below a double-bottom base buy point of 58.70, according to MarketSmith analysis. But the relative strength line is looking encouraging.
Meanwhile Tesla stock gained as the firm once again hiked prices amid ongoing chip shortages.
The Model 3 Standard Range price rose $2,000 to $41,990, while the Performance model price increased $1,000 to $57,990. The Model Y Long Range and Performance now each cost $1,000 more at $54,990 and $61,990.
These 4 Stocks Outperform
With the market still in a correction, investors should be noting stocks showing good relative strength.
Paychex saw its relative strength line hit a new high Wednesday. The human resources stock now sits just below a cup buy point of 118.32.
Bank of New York Mellon has formed a flat base with a 56.74 buy point.
Financial stocks have been doing well of late, and the relative strength line for BK stock is driving higher. Earnings are not ideal however.
American Express is another candidate holding up well. The Dow Jones stock has formed a cup-with-handle base, and is shooting for a 178.90 entry.
The credit card stock offers good all-around performance, and its RS line has just reached new heights.
Supply chain software play American Software has seen its RS line go on a tear since late July.
This stock has formed a cup-with-handle base, and is nearing an entry of 26.08.
Earnings have some way to go to catch up with market performance however.