The Dow Jones Industrial Average gained amid a broad rally. Treasury Secretary Janet Yellen denied a recession is underway despite a major signal being flashed. Solar stocks soared after Sen. Joe Manchin struck a deal on spending with Senate Majority Leader Chuck Schumer. Apple (AAPL) and Amazon (AMZN) beat earnings views.
Meanwhile, a trio of stocks made bullish moves amid the encouraging action. Quanta Services (PWR), Heico (HEI) and Carlisle Cos. (CSL) all passed buy points.
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Volume impressed, rising on both the Nasdaq and the New York Stock Exchange, according to early data.
The yield on the benchmark 10-year Treasury note slid six basis point to 2.67%. West Texas Intermediate crude oil slipped slightly to just over $97 per barrel.
Yellen Issues Recession Denial
Treasury Secretary Janet Yellen denied the U.S. is in the grip of a recession despite a second straight quarterly decline in GDP. This is usually seen as an indicator of a recession.
GDP declined 0.9% in Q2 according to new Commerce Department data. This comes after it dipped 1.6% in Q1. Economists had been expecting to see slender growth of 0.3%.
“Most economists and most Americans have a similar definition of recession — substantial job losses and mass layoffs, businesses shutting down, private-sector activity slowing considerably, family budgets under immense strain,” Yellen said during a news conference. “In sum, a broad-based weakening of our economy. That is not what we’re seeing right now when you look at the economy.”
Nevertheless, stocks may be gaining on hopes the Federal Reserve will be able to achieve its “softish” landing of a short and shallow recession.
But Oanda senior market analyst Edward Moya said that “stagflation is here” and believes the GDP data complicates the Fed’s plan to aggressively fight inflation.
“The US economy is weakening much faster than anyone expected,” he said in a note to clients. “The first look at (the) second quarter showed another negative reading, which was a surprise for most on Wall Street.”
Nasdaq Powers Higher; Small Caps Gain
The Nasdaq posted a second-straight session of strong gains as it popped 1.1% higher. Align Technology (ALGN) impressed with a 7.5% rise.
The S&P 500 actually fared even better as it rose 1.2%. Etsy (ETSY) stood out with a 9.9% gain.
The S&P 500 sectors were nearly all positive. Real estate and utilities, both defensive areas, fared best. Communication services was the only negative area as Comcast (CMCSA) results failed to impress investors.
Small caps also gave the bears a bloody nose, with the Russell 2000 closing up 1.3%.
The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, powered higher. It rose 1.9%.
Dow Jones Today: Apple Earnings Beat
The Dow Jones industrials turned in another day of solid gains, closing up more than 300 points, or 1%.
Nike (NKE) was the top performer as it gained 4.1% while Microsoft (MSFT) also did well as it rose 2.9%.
Apple stock closed up 0.4% and jumped a further 3% after hours following its earnings report. The Cupertino, Calif.-based company earned $1.20 a share on sales of $83 billion in the quarter ended June 25. It had been expected to earn $1.16 a share on revenue of $82.8 billion.
Wall Street had been bracing for a weak report from Apple amid declining industrywide sales of personal computers and smartphones.
The now has the 200-day moving average in its sights, though it could act as a resistance level.
Fellow Big Tech giant Amazon, which is not a Dow Jones component, moved 1.1% higher ahead of its earnings report.
But shares after hours 12% in extended trading after the e-commerce giant reported an adjusted loss of 20 cents a share on revenue of $121.2 billion.. Wall Street was expecting earnings of 52 cents per share on sales of $119 billion.
It was boosted after after guiding for Q3 net sales in the range of $125 billion to $130 billion, with a midpoint at $127.5 billion. The Wall Street estimate calls for $126.5 billion.
Solar Stocks Shine Amid Manchin-Schumer Deal
Solar stocks were given a major boost after rebel Democrat Sen. Joe Manchin reached an agreement with Senate Majority Leader Chuck Schumer on a revised spending package.
It will invest $369 billion into energy and climate change programs to help reduce carbon emissions by 40% by 2030.
Leaderboard member Invesco Solar (TAN) was among the big winners due to the move. It rose 7.5%. TAN is now extended after a breakout over a trendline at the 175 mark on Wednesday. It is also just above the top of the buy zone from a 78.82 standard entry.
The ETF was not the only big gainer though. Component Enphase Energy (ENPH), which posted strong earnings this week popped more than 7%.
SolarEdge Technologies (SEDG) rose almost 5%, JinkoSolar (JKS) gained nearly 3% and SunPower (SPWR) rocketed almost 18%.
Outside Dow Jones: These Stocks Pass Buy Points
It was not only solar stocks that benefited from the spending deal. Quanta Services closed at the top of its buy range after it powered past a cup-with-handle base entry of 138.56.
The handle was deep, and could be viewed as a separate cup base.
The company stands to benefit from increased spending by federal and local governments seeking to upgrade the nation’s aging power grids. Overall strong performance is very strong, which is reflected in a perfect IBD Composite Rating of 99.
Meanwhile, Heico has cleared a trendline early entry near 145.73 as a double bottom forms. It closed in its buy zone from this early entry.
Heico is a major aftermarket supplier of parts for manufacturers of airline jets, war planes plus targeting systems. Big Money has been snapping up the stock of late, with its Accumulation/Distribution Rating a strong B+.
Both Quanta Services and Heico have won spots on the prestigious IBD Leaderboard list of top stocks.
Market Rally Extends Momentum As Apple Pops, Amazon Soars
Building materials play Carlisle is in a buy zone after breaking out past a double-bottom base entry of 272.68. The stock surged in strong volume after Carlisle posted strong earnings. A 185% jump in EPS to $6.15 came in well clear of analyst expectations.
The stock has powered above its 50-day moving average while its rising relative strength line has just hit a new high. In addition to an excellent earnings track record, Carlisle also ranks in the top 5% of stocks in terms of price performance over the past 12 months. Big Money is a key backer, with 57% of all of its stock currently held by funds.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
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