The Markets Love These Economic Reports

Better-than-expected readings on personal spending and pending home sales during March sent the S&P 500 to a new record-high closing level.

Instead of rallying despite economic news, the S&P 500 (NYSEARCA:SPY) reached a new record-high closing level on Monday because of economic news. The U.S. Department of Commerce’s Bureau of Economic Analysis reported that although personal income increased by only half as much as expected at 0.2 percent, personal consumption expenditures rose by twice as much as expected, or 0.2 percent. More good news came from the National Association of Realtors, which disclosed that its Pending Home Sales Index rose more than twice as much as expected, to 1.5, during March.

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The Dow Jones Industrial Average (NYSEARCA:DIA) jumped by 106 points to reach 14,818 for a 0.72-percent advance. The S&P 500 also rose 0.72 percent to close at 1,593.61, edging out its previous record high close of 1,593.37, set on April 11.

The Nasdaq 100 (NASDAQ:QQQ) surged 0.93 percent to 2,866. The Nasdaq Composite Index climbed 0.85 percent to close at its highest level since November of 2000 at 3,307.02. The Russell 2000 (NYSEARCA:IWM) rose 0.77 percent to end the day at 942.

In other major markets, oil (NYSEARCA:USO) skyrocketed 1.51 percent to close at $33.61. On London’s ICE Futures Europe Exchange (NYSEARCA:BNO), June futures for Brent crude oil  advanced by 64 cents, or 0.62 percent, to $103.80/bbl. June gold futures (NYSEARCA:GLD) climbed by $19.70, or 1.36 percent, to $1,473.30 per ounce.

Transports picked up speed on Monday, with the Dow Jones Transportation Index (NYSEARCA:IYT) advancing 0.58 percent.

All of the major European stock indices surged following the news that Italy (NYSEARCA:VGK) had finally formed a government under its new prime minister, Enrico Letta. The Euro STOXX 50 Index finished Monday’s trading session with a 1.27 percent jump to 2,717 — staying above its 50-day moving average of 2,647.  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.

Japan’s (NYSEARCA:EWJ) stock market was closed on Monday for a national holiday. 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 0.15 percent to 22,580.

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Technical indicators reveal that the S&P 500 remains above its 50-day moving average of 1,551 with a record-high close at 1,593.61 — motivating the bears to hope that we’re watching the formation of a double-top, which would signal a decline. Its Relative Strength Index is at a healthy 60.48. Although the MACD crossed above the signal line on 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, all sectors finished solidly in positive territory, with materials and technology taking a decisive lead. Industrials and consumer staples were the laggards, advancing 46 percent and 27 percent, respectively.

Consumer Discretionary (NYSEARCA:XLY):  +0.35 percent

Technology (NYSEARCA:XLK):  +1.43 percent

Industrials (NYSEARCA:XLI):  +0.46 percent

Materials (NYSEARCA:XLB):  +1.52 percent

Energy (NYSEARCA:XLE):  +1.01 percent

Financials (NYSEARCA:XLF):  +0.48 percent

Utilities (NYSEARCA:XLU):  +0.90 percent

Health Care (NYSEARCA:XLV):  +0.38 percent

Consumer Staples (NYSEARCA:XLP):  +0.27 percent

Bottom line: The S&P 500 Index reached a new record closing high on Monday following two better-than-expected economic reports that indicated that both personal spending and pending home sales increased twice as much as expected during March.

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

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