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Buy-the-Dip Rally Pushes S&P 500 Above 50-Day Moving Average

https://www.briefing.com/investor/markets/stock-market-update/2017/8/22/buythedip-rally-pushes-s-and-p-500-above-50day-moving-average.htm

22-Aug-17 16:30 ET
Dow +196.14 at 21899.89, Nasdaq +84.35 at 6297.46, S&P +24.14 at 2452.47

[BRIEFING.COM] Wall Street rallied on Tuesday as investors bought the dip that has dented the major averages in recent weeks. Equities crept higher throughout the morning, hit some resistance at the S&P 500's 50-day simple moving average (2,450.29), and then overcame the key technical level in the late afternoon. The Nasdaq (+1.4%) led the advance, followed by the S&P 500 (+1.0%), and then the Dow (+0.9%).

Tax reform came back into focus on Tuesday following a Politico report that President Trump's team has made significant progress on a tax-reform proposal. The potential framework laid out in the article fell somewhat short of the market's original expectations, but Wall Street took it as a positive nonetheless as investors have been starved for some sense of progress on tax reform.

Strength was broad-based on Tuesday with six sectors--financials, consumer discretionary, industrials, materials, technology, and health care--settling with gains of at least 1.0%. The top-weighted technology sector (+1.5%) led the charge, breaking a three-session losing streak. Within the tech group, chipmakers showed notable strength, sending the PHLX Semiconductor Index higher by 1.6%.

Like chipmakers, biotechnology names outperformed, evidenced by the 1.9% increase in the iShares Nasdaq Biotechnology ETF (IBB 310.52, +5.84). The biotech rally helped the influential health care sector (+1.2%) settle just a step below the technology group at the top of the sector standings. The lightly-weighted materials space also outperformed, adding 1.2%.

On the flip side, the consumer staples (unch), utilities (+0.2%), and real estate (-0.1%) sectors struggled, finishing solidly behind the broader market. The energy space (+0.7%) did notably better, but also finished a ways behind the broader market. Crude oil reclaimed some of Monday's plunge, climbing 0.6% to $47.64/bbl, but not enough to really excite the bulls within the energy space.

As for earnings, DSW (DSW 18.43, +2.74) surged 17.5% after beating both top and bottom line estimates. Conversely, Medtronic (MDT 81.76, -1.76) and Toll Brothers (TOL 37.27, -0.99) dropped 2.1% and 2.6%, respectively, despite reporting better than expected earnings.

In the bond market, U.S. Treasuries tumbled across the yield curve with longer-dated issues settling at their session lows. The benchmark 10-yr yield climbed four basis points to 2.22% while the 2-yr yield advanced three basis points to 1.32%. Meanwhile, the U.S. Dollar Index (93.45, +0.45) jumped 0.5%, reclaiming all of Monday's slide.

Reviewing Tuesday's economic data, which was limited to the FHFA Housing Price Index for June:

The FHFA Housing Price Index for June rose 0.1%. The prior month's reading was revised to 0.3% (from 0.4%).

On Wednesday, investors will receive just two pieces of economic data--the weekly MBA Mortgage Applications Index and July New Home Sales (Briefing.com consensus 615K). The two reports will cross the wires at 7:00 ET and 10:00 ET, respectively.

Nasdaq Composite +17.0% YTD
Dow Jones Industrial Average +10.8% YTD
S&P 500 +9.5% YTD
Russell 2000 +1.0% YTD