The Nasdaq, S&P 500 and Dow faded badly in afternoon trading Wednesday after the Fed, as expected, decided to stand pat on interest rates. Apple stock and the Fed meeting were focal points for the stock market Wednesday, but overall, it was a bearish close for the indexes despite strong earnings from Apple.
XThe Nasdaq composite strengthened after the Fed announcement at 2 p.m. ET, but ended with a loss of 0.4%. The Dow and S&P 500 fell 0.7%. Small caps outperformed as the Russell 2000 added 0.3%. Preliminary data showed volume on the NYSE and Nasdaq coming in higher than Tuesday's levels.
The Dow and S&P 500 are holding just above their 200-day moving averages, while the Nasdaq on Wednesday marked its ninth straight close below the 50-day line.
Shares of PayPal (PYPL) took a hit in the Nasdaq 100, falling more than 4%. It closed just below the 200-day moving average.
Apple Stock Strong
In the stock market today, Apple (AAPL) stock jumped more than 4% to 176.57 after reporting strong earnings late Tuesday. The stock gapped bullishly above the 50-day moving average. Its April 17 high of 178.94 is a potential resistance level to watch.
Apple was one of the top gainers in the Nasdaq 100, along with Automatic Data Processing (ADP), which also gapped up on earnings. Shares added nearly 3%.
Apple supplier Lumentum (LITE) gapped up on strong earnings. It also gave a bullish outlook for the current quarter. Shares jumped 11%.
Centene, Spotify Rise
Among the day's movers, Centene (CNC) made a nice move on the heels of its earnings report last week. Shares jumped 5% to 114.24. It's slightly extended now after reclaiming a 109.23 buy point.
Spotify (SPOT) soared 3% to 170 ahead of its earnings report after the close. It closed just above a 169.10 of an IPO base, but shares plunged 6% in after-hours trading. Sales growth has been impressive at Spotify in recent quarters, but the music streaming company isn't profitable yet.
Hospital stocks outperformed again after Tenet Healthcare (THC) reported strong results late Monday. Shares of Tenet followed through powerfully after Tuesday's breakout that saw shares rise 19%. The stock was up an additional 10% Wednesday.
Three Stocks Gap Up On Earnings
Elsewhere, Shutterfly (SFLY) gapped up more than 15% on strong earnings. It cleared a flat base with a conventional entry at 86.51. When a stock gaps up in price, it's OK to buy as close to the open price (90.75) as possible. Keep in mind that it's generally a difficult environment for new buys with the market uptrend under pressure.
When shares were trading around 81.50 Tuesday, a monthly call option for Shutterfly with an 82.50 strike price (May 18 expiration) came with a premium of around $5.05. This presented a trade with elevated downside risk of 4.5% ($5.05/81.50).
The trade still worked out as shares were recently trading around 92.50. Every week, the Earnings Preview column highlights firms with bullish charts that could be candidates for bullish call-option trades.
In the enterprise software space, Ultimate Software (ULTI) also gapped up on strong earnings but was off session highs. It cleared an aggressive entry at 253.07 earlier in the session. Shares closed at 249.88, up nearly 3%.
Inside the IBD 50, Mastercard (MA) was one of the top percentage gainers. Shares rose 3% to 185.82, good for a breakout from a flat base with a 183.83 buy point.
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