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Small Caps Slide While Main Stock Market Indexes Strengthen; GDP Forecast Cut

The small-cap rebound took a day off, as the Russell 2000 gave back most of Wednesday’s 1.8% gain. The major stock market indexes gained some strength in afternoon trading.




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The Russell 2000 was off 1.2% and still up nearly 2% for the week. The small-cap benchmark made positive action this week, finding support at the 40-week moving average. It also successfully tested the lows from January and March. But the index now faces a test of resistance at the 50-day moving average.

The main stock market indexes cooled off after two days of solid gains. In afternoon trading, indexes bounced off session lows.

The Nasdaq composite was up 0.3% as technology and health care — which combine for about 60% of the Nasdaq — led the stock market. Technology Select Sector SPDR (XLK) was up 0.6% and nearing new highs.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 34799.37 +1.37 +0.00
S&P 500 (0S&P5) 4363.08 +4.39 +0.10
Nasdaq (0NDQC ) 14675.27 +43.32 +0.30
Russell 2000 (IWM) 219.08 -2.98 -1.34
IBD 50 (FFTY) 44.40 +0.20 +0.45
Last Update: 1:32 PM ET 7/22/2021

The S&P 500 climbed 0.1%.  The Dow Jones Industrial Average was flat. Microsoft (MSFT) made a new high. It is extended from a 263.29 buy point.

Volume was lower on the NYSE and Nasdaq compared with the same time on Wednesday. Despite index gains, losers led winners by roughly 2-1 on the NYSE and Nasdaq.

Financials, energy, real estate and transportation were the weakest sectors.

Crocs, Xpel In Stock Market Focus

Crocs (CROX) pared gains but still traded at record highs after gapping up on a strong earnings report. The footwear company beat expectations with EPS up 121% to $2.23. Revenue surged 93% to $640.8 million, the fourth straight quarter of accelerating growth. Crocs, an IBD Leaderboard stock, also gave a bullish outlook. It sees Q3 revenue up 60%-70% and full-year sales up 60%-65%.

Xpel (XPEL) rose past the 94.31 buy point of a flat base in heavy trading, although the auto parts manufacturer thinned its gains.

Datadog (DDOG) broke out of a deep cup-with-handle base and traded near the 110.34 buy point. Volume was below average, which raises the risk for this breakout. The cloud-based network monitoring platform reports earnings Aug. 5.

First Energy (FE) broke out of flat base and is in buy range from the 39.33 buy point. Volume ballooned on news that the Ohio-based electric utility settled accusations of bribery. The company agreed to pay $230 million in the settlement with the U.S. Attorney’s Office. The company will announce second-quarter results after today’s close.

IBD 50 Climbs As DLocal Bounces

Innovator IBD 50 ETF (FFTY) also paced itself after two strong gains and a bullish reversal Monday. The ETF rose 0.5% and faces possible resistance at the 50-day line.

DLocal (DLO) led the IBD 50 with a nearly 7% gain. The IPO stock has been volatile and a breakout attempt last week quickly unraveled. Figs (FIGS), another new issue, reversed lower and faces resistance at a downward-sloping 50-day line.

IHS Markit today downgraded its forecast for this year’s U.S. GDP growth from 7.4% to 6.6%. The revision is largely because of weaker consumer and business spending in May, said Sara Johnson, executive director of IHS Markit global economics. “The recovery remains on solid footing owing to a nearly complete recission of pandemic containment measures, expansionary fiscal and monetary policies, and restocking of depleted inventories.”

IHS Markit also slightly cut the global GDP growth forecast to 5.8%.

Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia

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