PowerShares QQQ Trust (QQQ) rallied 2.2%, SPDR S&P 500 (SPY) rose 1.1% and SPDR Dow Jones Industrial Average (DIA) added 0.9%. Emerging markets lagged again: iShares MSCI Emerging Markets ticker symb=EEM] climbed 0.2%.
All three major indexes popped above their 50-day moving average lines. DIA, SPY and QQQ regained their 50-day for the first time since mid- to late March.
Biotech, telecom and tech led the upside among sector funds in the stock market today. Banks, consumer staples and energy underperformed. Among bank ETFs, SPDR S&P Regional Banking (KRE) and SPDR S&P Bank (KBE) fell 1.3% and 1.1%, respectively. Goldman Sachs‘ (GS) Q1 results beat views and the bank hiked its dividend. Yet, shares reversed from an initial gain to a 1.7% loss. Goldman said it expects to put Q2 share buybacks on hold. Comerica‘s (CMA) weak revenue and loan growth didn’t help banks, either.
General Electric (GE) and UnitedHealth (UNH), up more than 3% each, were the biggest blue chip gainers. Big-cap techs also scored gains as Cisco (CSCO), Microsoft (MSFT), Intel (INTC), IBM (IBM) and Apple all advanced 1% or more. Apple extended its win streak to four as it gets close to a 183.60 buy point of a flat base. Microsoft is also drawing near a flat-base entry, which would be at 97.34. Intel is just shy of a 53.88 flat-base buy point.
Netflix gapped up and soared 9% after the streaming movie service’s Q1 subscriber growth crushed views. The other FANG stocks had a good day too: Facebook (FB) rose 2%, Amazon (AMZN) leapt 4% and Alphabet (GOOG) gained 3.5%.
Defense stocks got a boost from Friday’s military strike on Syria’s chemical-weapons facilities, sending a sector ETF close to a buy point.
SPDR S&P Aerospace & Defense (XAR) broke out past the 90.27 buy point of a five-week flat base. It had traded at record highs in late January, before pulling back sharply with the broader market. The ETF rebounded over the next six weeks to a new high, but eased again to form the current pattern.
The $1.3 billion fund provides exposure to aerospace and defense stocks in the S&P Total Market Index. It tracks a modified equal-weighted index that offers access to large-, mid- and small-cap stocks in the sector. Top holdings as of April 13 included AeroVironment (AVAV), Aerojet Rocketdyne Holdings (AJRD), TransDigm Group (TDG), Raytheon (RTN) and Harris Corp. (HRS)
The five stocks make up nearly 18% of the 35-stock portfolio. Of those, Raytheon, which manufactures the Patriot Missile System, leads in terms of price performance with a 20% year-to-date gain through Monday. The stock extended its win streak for a sixth straight session and cleared a 222.92 flat-base entry on Monday. It remains in a potential buy range. TransDigm and Harris have returned 17% apiece this year.
XAR’s 5.8% year-to-date return as of Friday, according to Morningstar Inc., is well ahead of the S&P 500’s 0.1% deficit. Average annual returns of 15.7% and 21.7% over the past three and five years, respectively, also outpace the S&P index’s 10.5% and 13.2% gains for the same periods.
The defense stock ETF bears a 0.09% expense ratio.
Two other aerospace and defense funds to keep an eye on are $6 billion iShares U.S. Aerospace (ITA) and $1 billion PowerShares Aerospace & Defense Portfolio (PPA). ITA tracks the Dow Jones U.S. Select Aerospace & Defense Index, while PPA tracks the SPADE Defense Index. Both are working on the right side of flat bases.
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