Stock Market Holds Gains, As Chips Offer Some Rare Help

Stocks gripped sizable gains late Thursday morning, as Canadian trade talks turned silent but China and the U.S. were poised for a new round of negotiations. Meanwhile, Hurricane Florence started to hit the North Carolina coast.

The Nasdaq swaggered 0.9% higher, while the Dow Jones industrial average and the large cap S&P 500 added 0.5% each. Small caps trailed as the Russell 2000 lost 0.1%.

Volume was running lower on both major exchanges vs. the same time in the previous session.

The Nasdaq retook and was fighting to hold above the 8000 level.

Chip stocks contributed unevenly to the Nasdaq’s rebound as chipmakers, chip equipment makers and chip designers rose 1.7%, 1% and 0.3%, respectively. Semiconductors haven’t held a sector leadership role in the stock market since mid-November. Going into Thursday’s session, chips were No. 27 among 33 sectors. On Wednesday, chips accounted for seven new lows, the most among all sectors.

New Highs
In the IBD 50, a proxy for top stocks, telecom stock Ubiquiti Networks (UBNT) popped about 2% and hit a new high as the midcap headed toward its third daily gain in a row. BMO Capital Markets lifted its price target for Ubiquiti to 80. The stock is trading around 97.

On the downside, chip designer Monolithic Power Systems (MPWR) stumbled 5% — on track for its fifth loss in a row. Monolithic’s relative strength line has been sliding lower, a bearish sign.

The relative strength line measures a stock’s performance vs. the S&P 500. A rising line points to outperformance, a falling line to underperformance.

New highs Thursday included medical device provider Boston Scientific (BSX), up 2.5% in heavy volume. Breakouts included specialty glass maker Corning (GLW), up 2.5% in volume 99% above average.

Corning had been consolidating since January. The stock formed a cup-with-handle base that was 26% deep and offered a 34.25 buy point.

Blue Chip Stocks Up
Blue chips were up by a 9-5 ratio in the Dow. Apple (AAPL) led the pack with a 3% gain. Dow stocks rising about 1% included Travelers Companies (TRV), Microsoft (MSFT), IBM (IBM) and American Express (AXP).

Hurricane Florence was downgraded to a Category 2 hurricane as it hit North Carolina. Category 2 is associated with winds from 96 to 110 mph. Not too long ago, Florence was rated Category 4, which has winds from 131 to 155 mph. However the size of the Florence expanded, increasing the chances of flooding.

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