The major averages finished the day with modest gains after an up and down session. Stalled trade talks were offset by a much stronger than expected Philly Fed Mfg. Index coming in at 21.8 vs. the 4.5 estimate. June Leading Indicators however, missed the mark sliding -0.3% while consensus was for unchanged. A -10.27% drop in shares of Netflix (NFLX), after disappointing paid subscriber growth, left the Communication Services (XLC) sector as the day’s biggest loser. Utilities (XLU), Technology (XLK) and Financials (XLF) outperformed. Comments in the afternoon by Fed President John Williams that the Federal Reserve intended to act quickly to lower rates at the first sign of distress in the economy brought the different indexes off the lows of the day. That rekindled hopes for a half-point rate cut at the July FOMC meeting and yields drifted lower boosting stocks. Semiconductors and Gold Miners rallied for a second straight day while gold hit a 52-week high. Despite a +4.59% spike in shares of International Business Machines (IBM) after an earnings beat, losses in Unitedhealth Group (UNH) and Boeing (BA) left the DJIA with a meager gain of 3.12 points (+0.01%) at 27222.97. The S&P 500 added 10.69 points (+0.36%) to 2995.11, while the NASDAQ picked up 22.04 points (+0.27%) finishing at 8207.24.

Breadth was positive with advancing issues beating declining issues by 303 units on the NYSE and by 326 units on the NASDAQ. Advancing volume was 52% on the NYSE and 56% of the NASDAQ. VIX fell 0.44 point (-3.15%) and finished at 13.53. Crude oil prices lost 1.23 (-2.15%) despite the U.S. shooting down an Iranian drone and the August contract closed at $55.55 a barrel. Gold gained 23.80 (+1.66%) and closed at $1446.90 an ounce.

It was a volatile session with pockets of both strength and weakness as mixed earnings poured in. However, with renewed hopes for a possible half-point rate cut on the slate, look for traders to continue to buy the dips. Buying into the close today should lead to more gains to close out the week.

Earnings releases to watch for on Friday include: American Express (AXP), Kansas City Southern (KSU), Regions Financial (RF), Schlumberger (SLB) and USA Technologies (USAT).

By David L. Blake, CMT