Bumper Start to the Week? No Problem

Monday brought the stock market new record-high closing levels for the Dow, the S&P 500 and the Russell 2000.

The stock market managed to break new records on Monday, despite a disappointing report on June Retail Sales from the Commerce Department. The Commerce Department’s Census Bureau reported that retail sales increased by only 0.4 percent between May and June, falling far short of economists’ expectations of an increase of 0.8 percent. The result led many economists to speculate that America’s second quarter GDP could slow to an annual rate of less than one percent, compared with the 1.8 percent rate of annual expansion during the first quarter.

There was plenty of good news to offset Monday’s bad news. The New York Fed’s Empire State Manufacturing Survey for July jumped to 9.5 from June’s 7.84. Economists were actually anticipating a decline to 5.00. A better-than-expected quarterly earnings report from Citigroup (NYSE:C) helped feed Monday’s bullishness, as the stock soared 1.97 percent, giving the financial sector a boost.

China’s second quarter GDP report came as a big relief for investors, as the world’s second-largest economy expanded at an annual rate of 7.5 percent during the second quarter, in line with expectations.

In addition to reaching a new record-high closing level on Monday, the S&P 500 closed in positive territory for its eighth consecutive day — something it has not done since November of 2004. Although the Dow Jones Industrial Average reached a new record-high close of 15,484, its next challenge is to close above its all-time intraday high of 15,542 which was reached on May 22, 2013. The Russell 2000 Index hit a record-high close for its seventh consecutive trading day on Monday.

The Dow Jones Industrial Average (NYSEARCA:DIA) picked up 19 points to finish Monday’s trading session at a record-high close of 15,484 for a 0.13 percent advance. The S&P 500 (NYSEARCA:SPY) advanced 0.14 percent to a new record-high close at 1,682.50. The Nasdaq 100 (NASDAQ:QQQ) rose 0.03 percent to finish at 3,079. The Russell 2000 (NYSEARCA:IWM) climbed 0.65 percent to end the day at a new record-high closing level of 1,043.30.

In other major markets, oil (NYSEARCA:USO) advanced 0.29 percent to close at $37.67. On London’s ICE Futures Europe Exchange, September futures for Brent crude oil advanced by 12 cents (0.11 percent) to $108.05/bbl. (NYSEARCA:BNO). August Gold Futures advanced by $6.00 (0.47 percent) to $1,283.60 per ounce (NYSEARCA:GLD). Transports delivered on Monday, with the Dow Jones Transportation Average (NYSEARCA:IYT) advancing 0.48 percent.

In Japan, the stock market was closed for holiday. The Osaka Securities Exchange will merge with the Tokyo Stock Exchange, with 50 percent of the OSE shares being listed in Tokyo by August 30 and another 25 percent being phased in by October 31 (NYSEARCA:EWJ).

In China, stocks advanced after the nation’s second quarter GDP expanded at an annual rate of 7.5 percent, consistent with economists’ expectations. Although the economy slowed from first quarter’s annual rate of 7.7 percent, investors were relieved that the GDP rate did not slow more than anticipated. The Shanghai Composite Index surged 0.98 percent to close at 2,059 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index rose 0.12 percent to finish the session at 21,303 (NYSEARCA:EWH).

In Europe, China’s second quarter GDP report provided a nice distraction from the leadership crisis in Spain, as cries for Prime Minister Mariano Rajoy’s resignation grow louder in the wake of a slush fund scandal (NYSEARCA:EWP).

The Euro STOXX 50 Index finished Monday’s session with a 0.44 percent advance to 2,686 — struggling back toward its 50-day moving average of 2,706. Its Relative Strength Index is 54.47 (NYSEARCA:FEZ).  Technical indicators reveal that the S&P 500 continued rising above its 50-day moving average of 1,634 after finishing Monday’s session with another record-high close at 1,682.50. Its Relative Strength Index increased from 66.62 to 67.13. Both the MACD and the signal line continue to rise above the zero line, suggesting a further advance.

For Monday, most sectors were in positive territory, except for the consumer discretionary sector and the energy sector, which declined by .25 percent and .09 percent, respectively. The utilities sector took the lead, skyrocketing 1.63 percent.

Consumer Discretionary (NYSEARCA:XLY): -0.25 percent
Technology (NYSEARCA:XLK): +0.28 percent
Industrials (NYSEARCA:XLI): +0.36 percent
Materials (NYSEARCA:XLB): +0.25 percent
Energy (NYSEARCA:XLE): -0.09 percent
Financials (NYSEARCA:XLF): +0.44 percent
Utilities (NYSEARCA:XLU): +1.63 percent
Health Care (NYSEARCA:XLV): +0.10 percent
Consumer Staples (NYSEARCA:XLP): +0.14 percent

Bottom line: The disappointing June Retail Sales report from the Commerce Department’s Census Bureau failed to dampen investors’ spirits on Monday as the Dow, S&P 500, and Russell 2000 Indices reached new record-high closing levels.

John Nyaradi is the author of The ETF Investing Premium Newsletter.

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