US Stocks Opened the Trading Session Nearly Unchanged
US stocks opened the trading session nearly unchanged as investors absorbed Tuesday’s rally in technology stocks. Small cap stocks continue to move higher despite headwinds from the major bourses. Chinese shares continued to rally on the back of Tuesday injection of liquidity by the PBOC while IBM (NYSE:IBM) felt wrath of investors who expected better revenues. The major indexes closed mixed with the Dow under water and the Nasdaq and S&P 500 in the black.
Chinese shares have led Asian shares higher on Wednesday, with the Shanghai Composite rising 2.2%. Stock built on Tuesday’s gains following the injection of liquidity into money markets by the People’s Bank of China. The PBOC is expected to add more funds in operations Thursday.
IBM’s net profit rose 6% to $6.19 billion in the fourth quarter, but shares dropped after revenue fell 5.5% to $27.7 billion which was larger than expected. IBM’s adjusted EPS came in at $6.13, although the figure was lifted by $5.8 billion of stock buybacks.
As expected, the Bank of Japan has left its key interest rate at 0.1%, and maintained its program of expanding the monetary base by 60-70 trillion yen a year. The BOJ expects the economy to continue recovering moderately, although it will be affected by an upcoming rise in retail sales tax.
The Russell 2000 hit an all-time high on Tuesday which was lost within the investor’s community. As most market pundits focus on the major averages small cap stocks continue to move higher as earnings continue to beat market expectations. Support on the Russell is seen near the 50-day moving average at 1135. Momentum is relatively flat but the MACD recently generated a buy signal as the spread crossed above the 9-day moving average of the spread. The relative strength index (RSI) moved higher with price action printing near 62 which is on the upper end of the neutral range.
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