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- The Big Picture
Stock Market Rallies Broadly Again; For A Fresh Growth Stock Idea, Check Your Neighborhood Business In This Sector
Growth investors, it's time to exhale. A day after scores of big stock market leaders — including many within the IBD 50 — got kneecapped with sharp losses, the market proved on Wednesday that its uptrend remains robust and healthy.
But Wednesday's action also signaled that the hunt for bargains based on typical measures of valuation, such as the price-to-earnings ratio, is far from over.
During the final full day's worth of trading this week, the Nasdaq composite gained 0.9% and made an all-time high of 20,397. At that price, the composite has now risen as much as 5.6% for the year. The S&P 500 rose 0.5% on Wednesday, also marking a record-high close.
The 100 largest nonfinancial companies on the Nasdaq also fared well on Wednesday. The Invesco QQQ Trust (QQQ) exchange traded fund gained 0.7%. It nearly recouped all of Monday's 0.8% drop. Indeed, action by the highly popular ETF has stayed positive since it tested support at the rising 21-day exponential moving average on June 23.
The Dow Jones Industrial Average was a sore point in Wednesday's action. It closed nearly 11 points lower at 44,484. An 18-point drop by UnitedHealth (UNH), an IBD Long-Term Leader, hurt the Dow's cause. But the Dow Jones transportation average shined, rising 1.2%.
Stock Market: No Dearth Of News, Yet Lighter Trading
In addition, the Russell 2000 rose more than 1.2%. That made the large-cap indexes' advances look somewhat pedestrian. While the small-cap index has been lagging its large-cap siblings the whole year so far, it's very encouraging to see the Russell finish a third straight day above the long-term 200-day moving average. The Dow transports did the same on Wednesday.
Biotechs are also showing a bit more pep in their step.
Dow industrials component Amgen (AMGN), which three decades ago was one of the biggest stock market winners, gained 2.2%. At 296.85, the giant in biotherapies for a wide range of diseases is now back above its own 200-day moving average. The Relative Strength Rating of 29 is still wretched. However, it will become even more interesting to monitor Amgen, should it break through prior upside resistance levels of 300 and 320-335. These price levels serve as a key overhead supply of potential sellers.
Amgen is currently wallowing within a long, amorphous base after peaking at 346.85 during the week ended July 26 last year. According to MarketSurge, Amgen shows a 12-month forward P-E ratio of 14, far less than that of the S&P 500.
Scaling The Wall
Certainly, the stock market continues to act bullishly as it appears to take gloomy headlines on the economy in stride.
The monthly nonfarm payrolls report comes out on Thursday before the close. On Wednesday, a surprise drop of 33,000 in private-sector jobs from payrolls giant ADP basically did not cause stock market bulls to flinch.
Bill Adams, chief economist at Comerica Bank, noted that the jobs picture is mixed. While June saw 56,000 jobs lost in professional and business services and 52,000 lost in education and health services, employment rose by 32,000 in leisure and hospitality. Plus, the manufacturing sector added 15,000 net new jobs. And 14,000 positions were added in trade, transport and utilities.
"Foreign-born workers accounted for four-fifths of labor force growth between early 2020 and early 2025," Adams wrote in comments emailed to IBD. "Without their contribution to the ranks of job seekers, the labor force would have only grown by about 20,000 per month over that period. The current crackdown on immigration means that financial markets will likely be surprised by the unemployment rate holding steadier in the second half of the year than is currently priced in."
In May, the U.S. jobless rate stayed very low at 4.2%.
Stock Market Technicals On Wednesday
Going back to the stock market, volume declined on both exchanges. That comes as no surprise. The stock market will close at 1 p.m. ET on Thursday ahead of Friday's July Fourth holiday, during which markets will be closed. Equity trading desks are most likely to remain thinly staffed for the rest of the week, despite the developments arising out of the closely watched vote and deliberations by the House of Representatives on President Donald Trump's massive tax cut and spending legislation known as the "Big Beautiful Bill."
The landmark piece of legislation, which would slash as much as $1 trillion from Medicaid spending and include a tax deduction of up to $6,000 for seniors, narrowly passed the Senate after Vice President JD Vance cast the deciding vote.
A survey of IBD's 197 industry group leaders highlighted how the beaten-down trade is suddenly hip again.
For instance, in Tuesday's The Big Picture column, the accompanying General Market Indicators PDF noted huge gains by some of the worst-ranking industries within the 197 tracked by IBD each day. The residential building group, which went into Wednesday's trading ranked No. 181, bolted 3.9% higher, while home furnishings, at No. 190, jumped 4.3%. Truck transport, ranked 193rd, soared 4.4%, while No. 194 Building-Wood Products topped that gain, up 5.6%.
Is Your Neighborhood Bank Getting Busier?
Small and midsize banks have an outsized presence on the Russell 2000.
Large banks dominated the financial news headlines following the latest results of stress tests conducted by the Federal Reserve on key lenders. Many Wall Street firms announced plans to raise dividends. JPMorgan Chase (JPM), a full-size position on IBD Leaderboard, rose nearly 0.6% for its ninth gain in 10 trading days. At 292, JPM is way extended past a handle on a double-bottom base with a 269.52 buy point.
The bullish move wasn't limited to the so-called "bulge bracket" banks, which have large investment banking operations and expansive equity and debt trading floors.
Take a look at a daily chart of the SPDR S&P Regional Banking (KRE) exchange traded fund. It rose sharply for a second straight day in heavy volume, rising 5% in the process. The ETF has snapped a seven-month downtrend since topping at 70.25 on Nov. 25.
The complexion of the regional bank tracker's chart has changed since it bottomed out recently at 47.06 on April 7. A month later, the fund climbed back above its 50-day moving average and remained above it. That's a 180-degree turnaround from the way the ETF acted during much of February and March, when it spent its days trading below the 50-day line.
New Financial IPO
Northpointe Bancshares (NPB) probably won't be the first topic of conversation at outdoor barbecues or in between innings of baseball games over the weekend. However, IBD readers might want to keep the small cap as a watchlist candidate, if not as an additional stock to track how the banking sector is performing.
A member of MarketSurge's Growth 250 list, NorthPointe gained 1.6% to 14.28, notching its eighth gain in 10 sessions. In most of those up days, volume rang higher- than-normal levels. This price-volume action hints at institutional accumulation.
The Grand Rapids, Mich., lender went public in February at $14.50 a share.
