Here’s How the Markets Landed Another Bumper Day

April’s Consumer Confidence Index and the Case-Shiller Home Price Index for February sent the S&P 500 to a new record-high closing level.

For the second consecutive day, economic news brought the S&P 500 (NYSEARCA:SPY) to a new record-high closing level. The S&P/Case-Shiller Home Price Index for February got the bulls running after its 20-City Composite rose 9.3 percent on a year-over-year basis, beating expectations for a 9-percent increase.

Although the Chicago Purchasing Managers’ Index (aka the Chicago Business Barometer) for April fell 3.4 points to a 42-month low of 49.0, the disappointment was offset by good news from the Conference Board. The board’s Consumer Confidence Index jumped to 68.1 in April from 61.9 in March. Economists had been expecting a more modest advance to 62.

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Reports such as the Consumer Confidence Index and the University of Michigan’s Consumer Sentiment Index are closely watched as they are seen as forward-looking indicators on consumer demand. Since the American economy is 70 percent consumer-driven, a good deal of attention is focused on this data.

The Dow Jones Industrial Average (NYSEARCA:DIA) picked up 21 points to reach 14,839 for a 0.14-percent advance. The S&P 500 climbed 0.25 percent to finish at 1,597.56 for another record-high close.

The Nasdaq 100 (NASDAQ:QQQ) surged 0.71 percent to 2,887. The Nasdaq Composite Index climbed 0.66 percent to close at its highest level since November of 2000, at 3,328.79. The Russell 2000 (NYSEARCA:IWM) rose 0.53 percent to end the day at 947.

In other major markets, oil (NYSEARCA:USO) sank 1.34 percent to close at $33.16. On London’s ICE Futures Europe Exchange, June futures for Brent crude oil (NYSEARCA:BNO) declined by $2.24 (2.16 percent) to $101.57/bbl. June gold futures (NYSEARCA:GLD) climbed by $8.50, or 0.58 percent, to $1,475.90 per ounce. Transports accelerated on Tuesday, with the Dow Jones Transportation Index (NYSEARCA:IYT) advancing 0.51 percent.

Most of the major European stock indices declined after Eurostat’s April 30 report on unemployment disclosed that the unemployment rate in the euro zone rose to 12.1 percent in March from 12.0 percent in February. (NYSEARCA:VGK).

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The Euro STOXX 50 Index finished Tuesday’s trading session with a 0.20-percent dip to 2,712 — staying above its 50-day moving average of 2,649.  After breaking above its overhead resistance level of 2,700 on January 21, the STOXX 50 is again testing resistance at that level, which has been a barrier since the beginning of the year.

Tuesday brought another “Abenomics” lift for Japan’s stock market after quarterly earnings reports demonstrated how the prime minister’s stimulus program is benefiting brokerage firms. Nomura Equities reported a 300-percent profit surge for its best quarter in seven years. The Nikkei 225 Stock Average (NYSEARCA:EWJ) advanced 0.17 percent to 13,860.

In China, the Shanghai Stock Exchange (NYSEARCA:FXI) is closed until May 2 for the May Day holidays. Hong Kong’s Hang Seng Index (NYSEARCA:EWH) advanced 0.69 percent to 22,737.

Technical indicators reveal that the S&P 500 remains above its 50-day moving average of 1,552 — motivating bears to hope that they are watching the formation of a double-top, which would signal a decline. Its Relative Strength Index is at a healthy 61.63. Although the MACD crossed above the signal line last Thursday, it has not made a significant departure from there. A break back below the signal line would suggest the likelihood of a decline.

For the day, most sectors finished solidly in positive territory, with technology taking a decisive lead. Consumer staples and healthcare were the only laggards, actually falling into the red by declining 17 percent and 75 percent, respectively.

Consumer Discretionary (NYSEARCA:XLY):  +0.28 percent

Technology (NYSEARCA:XLK):  +1.12 percent

Industrials (NYSEARCA:XLI):  +0.07 percent

Materials (NYSEARCA:XLB):  +0.15 percent

Energy (NYSEARCA:XLE):  +0.40 percent

Financials (NYSEARCA:XLF):  +0.27 percent

Utilities (NYSEARCA:XLU):  +0.27 percent

Health Care (NYSEARCA:XLV):  -0.75 percent

Consumer Staples (NYSEARCA:XLP):  -0.17 percent

Bottom line: Rising home prices and better-than-expected consumer confidence gave the bulls the fuel they needed to keep their momentum going as the S&P 500 rose to yet another record closing high on Tuesday.

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

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