Here’s How the Market Kept its Rally Going

A better-than-expected report on initial unemployment claims brought new record highs for the Dow and S&P 500.

A better-than-expected 10.8 percent drop from last week’s revised total of initial unemployment claims brought new record highs for the Dow Jones Industrial Average (NYSEARCA:DIA) as well as the S&P 500 (NYSEARCA:SPY) on Thursday. New record highs were reached during intraday trading, with the Dow hitting 14,887.51 and the S&P tagging 1,597.35.

Both indices set new record closing highs, as well. The S&P 500 advanced 0.36 percent to close at 1,593.37 and the Dow climbed 62 points (0.42 percent) to finish at 14,865.14.

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Although the Nasdaq Composite advanced 0.09 percent to 3,300, the Nasdaq 100 (NASDAQ:QQQ) finished flat on the day at 2,859. The Russell 2000 (NYSEARCA:IWM) crept upward by 0.10 percent to 947.

In other major markets, oil (NYSEARCA:USO) fell back down the well, sinking 1.09 percent to close at $33.46.

On London’s ICE Futures Europe Exchange (NYSEARCA:BNO), June futures for Brent crude oil declined by $1.44 , or 1.36 percent, to $104.34/bbl.

June gold futures  (NYSEARCA:GLD) advanced by $1.50 (0.10 percent) to $1,560.30 per ounce.

Transports hit the brakes on Thursday, with the Dow Jones Transportation Index (NYSEARCA:IYT) declining 0.30 percent.

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The major European stock indices continued their winning streak to a fourth consecutive day, with the least-significant advance made by Spain’s IBEX 35 Index  (NYSEARCA:EWP), which rose 0.28 percent to 8,159. Japan’s Nikkei 225 Stock Average made another enormous, 1.96 percent jump as the yen continued weakening.

In China, the Shanghai Composite Index (NYSEARCA:FXI) declined 0.29 percent to 2,219, although Hong Kong’s Hang Seng Index (NYSEARCA:EWH) managed to make a 0.30 percent advance to 22,101. Wednesday’s disappointing report from the nation’s customs bureau continued to take its toll on Chinese stocks during Thursday’s trading session. The report indicated that the nation’s exports rose by only 10 percent during March, falling short of economists’ expectations for an 11.7 percent increase.

Technical indicators point to an overbought market as the S&P 500’s Relative Strength Index reached 67.28 and is quickly approaching the “overbought” threshold of 70. Its MACD has now crossed above the signal line, which could suggest a possible advance.

For the day, all sectors except technology finished solidly in positive territory. Microsoft (NASDAQ:MSFT) and Hewlett Packard (NYSE:HPQ) dragged the tech sector down by sinking 4.44 percent and 6.45 percent, respectively.

Consumer Discretionary (NYSEARCA:XLY):  +0.84 percent

Technology  (NYSEARCA:XLK):  -0.29 percent

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Industrials (NYSEARCA:XLI):  +0.29 percent

Materials (NYSEARCA:XLB):  +0.43 percent

Energy (NYSEARCA:XLE):  +0.43 percent

Financials (NYSEARCA:XLF):  +0.32 percent

Utilities (NYSEARCA:XLU):  +0.22 percent

Health Care (NYSEARCA:XLV):  +0.97 percent

Consumer Staples (NYSEARCA:XLP):  +0.45 percent

Bottom line: The drop in initial unemployment claims to 346,000 for the week — instead of the 365,000 expected by economists — gave investors enough enthusiasm to nudge the Dow and S&P 500 to new intraday and closing record highs. Microsoft’s 4.44 percent decline dragged the tech sector down, as did two separate reports that first-quarter PC sales had fallen by almost 15 percent compared with the first quarter of 2012. The news also dragged Hewlett Packard down by 6.45 percent.

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

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