The major stock indexes closed modestly lower Thursday, but the dull session masked continued strength in small caps.
XThe Russell 2000 climbed 0.5% at the close to a new all-time high. The index seemed to be getting strength from different areas.
The Russell's main sectors are financial, technology and health care. Of those, health care is showing relative strength, and industrials acted well. SPDR S&P Pharmaceuticals (XPH) and iShares U.S. Healthcare Providers (IHF) were up 0.7%. Regional banks were another area of outperformance.
The Nasdaq composite lagged with a 0.2% loss. Cisco Systems (CSCO), one of the major Nasdaq components, weighed as shares gapped below the 50-day moving average. Cisco's results topped views late Wednesday, but guidance was soft. Cisco is 6% below the 46.26 buy point of a cup base, not down enough to trigger a sell signal.
The S&P 500 fell 0.1%. Cisco's slide also hurt the S&P 500 and Dow Jones industrial average, which both fell 0.2%. Walmart (WMT) also dragged the Dow as the retail giant tumbled on disappointing same-store sales.
While the Russell 2000 is making new highs, the Nasdaq, S&P 500 and Dow are off 3% to 7% from prior highs, illustrating the leadership of small caps.
After the close, another important tech company reported earnings as Applied Materials (AMAT) beat profit views. But shares were down moderately. Applied has been printing a messy chart and met resistance at the 50-day line this week.
The energy sector led Thursday, even while oil prices were flat. Nine of the 12 best-performing industry groups in the stock market today were oil and gas.
As was the case earlier this week, the retail sector led. Department stores rose 1.7% as Macy's (M) added to its post-earnings rally. Macy's gains offset a sharp drop in shares of J.C. Penney (JCP), which cut its outlook. Dillard's (DDS), however, jumped about 7% after earnings and touched its 50-day line for the first time since April 30.
Leading stocks held up well and in some ways did better than the broad market. The Innovator IBD 50 (FFTY) exchange traded fund finished with a 0.2% increase. Baozun's (BZUN) 19% surge gave the IBD 50 a big boost. Read more chart analysis on Baozun in this earlier Stock Market Today column.
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