The S&P 500 reached a record-high close as stocks benefited from an upside surprise on January durable goods orders.
The release of the January report on Durable Goods Orders from the Commerce Department’s Census Bureau gave stocks another boost on Thursday. Although the headline number of $225.0 billion – indicating a 1.0 percent decline from December’s final reading – was in-line with economists’ expectations, the big surprise was the reading on orders for “core capital” durable goods. The reading on “core capital” durable goods orders – a category which is limited to non-defense capital goods orders, excluding aircraft – is closely-watched as a forward-looking indicator of plans for business expansion. Orders for core capital durable goods jumped by 1.7 percent, after falling 1.8 percent in December. Economists were expecting another, less-significant decline of 0.5 percent.
The upbeat news on core capital goods orders was seen as a signal that businesses will be expanding (and doing more hiring) in the near future – giving less impact to the week’s increase of initial unemployment claims, which rose by 14,000 to 348,000.
The Dow Jones Industrial Average (DIA) picked up 74 points to finish Thursday’s trading session at 16,272 for a 0.46 percent advance. The S&P 500 (SPY) climbed 0.49 percent to a record-high close at 1,854.29 after reaching a record intraday high of 1,854.53.
The Nasdaq 100 (QQQ) climbed 0.63 percent to finish at 3,699. The Russell 2000 (IWM) advanced 0.53 percent to end the day at a record-high of 1,187.94.
In other major markets, oil (USO) declined 0.16 percent to close at $36.69.
On London’s ICE Futures Europe Exchange, April futures for Brent crude oil declined 75 cents (0.68 percent) to $108.77/bbl. (BNO).
April gold futures declined 40 cents (0.03 percent) to $1,331.40 per ounce (GLD).
The transportation sector was back in the express lane during Thursday’s trading session, as the Dow Jones Transportation Average climbed 0.59 percent to 7,316, rising back above its 50-day moving average of 7,296 (IYT).
In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks declined as the yen strengthened to 102.20 per dollar during Thursday’s trading session in Tokyo, as investors anticipated more strengthening due to the situation in the Ukraine. Sure enough, within an hour after the closing bell in Tokyo, the yen began to strengthen further, until it reached 101.77 per dollar, before easing back to 102.10. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (NYSEARCA:FXY). The Nikkei 225 Stock Average declined 0.32 percent to 14,923 (EWJ).
In China, profit-taking restrained stock advances on the mainland after the Shanghai Composite Index ended a four-day losing streak on Wednesday. The Shanghai Composite Index rose 0.30 percent on Thursday to 2,047 (FXI). In Hong Kong, a batch of better-than-expected earnings reports from such companies as Tencent Holdings and Baidu (BIDU) sent stocks soaring. Hong Kong’s Hang Seng Index jumped 1.74 percent to 22,828 (EWH).
In Europe, stocks continued to retreat, as rising tensions in the Ukraine reinforced the spirit of risk aversion. The Euro STOXX 50 Index finished Thursday’s session with a 0.42 percent decline to 3,134 – remaining above its 50-day moving average of 3,081. Its Relative Strength Index is 60.01 (FEZ).
Technical indicators revealed that the S&P 500 rose further above its 50-day moving average of 1,819 after finishing Thursday’s trading session with a 0.49 percent advance to a record-high close at 1,854.29. Its Relative Strength Index (RSI) rose from 59.92 to 62.62. The MACD and the signal line are climbing above the zero line, suggesting that the S&P could continue its advance during the immediate future.
On Thursday, all sectors advanced, except for the utilities sector, which declined by 0.25 percent.
Consumer Discretionary (XLY): +0.41%
Technology: (XLK): +0.81%
Industrials (XLI): +0.58%
Materials: (XLB): +0.79%
Energy (XLE): +0.10%
Financials: (XLF): +0.51%
Utilities (XLU): -0.25%
Health Care: (XLV): +0.58%
Consumer Staples (XLP): +0.45%
Bottom line: A better-than-expected report on orders for core capital durable goods in January fueled investors’ enthusiasm on Thursday, sending the S&P 500 to a record-high close, which marked the first time that the index closed above 1,850.
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