Stocks surged on Monday after the report on February’s industrial production indicated a better-than-expected increase.
Stocks made big gains on Monday after the Federal Reserve reported that during the month of February, industrial production increased by 0.6
percent, after January’s 0.2 percent decline. Economists had been expecting a less-significant, 0.3 percent increase. Manufacturing output rose 0.8 percent – nearly reversing January’s 0.9 percent decline.
Investors seemed less worried that World War III would break out as a result of Russia’s invasion of Crimea, after a weekend of wall-to-wall coverage focused on the missing Malaysian jetliner pushed the Ukrainian crisis almost completely out of the news.
The Dow Jones Industrial Average (DIA) picked up 181 points to finish Monday’s trading session at 16,247 for a 1.13 percent advance. The S&P 500 (SPY) soared 0.96 percent to 1,858.
The Nasdaq 100 (QQQ) surged 0.95 percent to finish at 3,662. The Russell 2000 (IWM) climbed 0.58 percent to 1,188.
In other major markets, oil (USO) sank 1.07 percent to close at $35.15.
On London’s ICE Futures Europe Exchange, May futures for Brent crude oil fell $1.93 (1.78 percent) to $106.28/bbl. (BNO).
April gold futures declined $11.70 (0.85 percent) to $1,367.30 per ounce (GLD).
The transportation sector was back making runs for NASA during Monday’s trading session, as the Dow Jones Transportation Average climbed 0.89 percent to 7,542 (IYT).
In Japan, the exchange rate for the yen remained the dominant factor in stock market activity. Japanese stocks declined as the yen strengthened to 101.30 per dollar during Monday’s trading session in Tokyo. A stronger yen causes Japanese exports to be less-competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average declined 0.35 percent to 14,277 (EWJ).
Stocks in mainland China soared following reports that the government will invest the equivalent of $163 billion in the reconstruction of shantytowns which comprise nearly 5 million households. Shares for cement companies and property developers led the advance. The Shanghai Composite Index surged 0.96 percent to 2,023 (FXI). Nevertheless, the move was not enough to break the “neckline” of the bearish, head-and-shoulders pattern on the Shanghai Composite’s chart. Hong Kong’s Hang Seng Index declined 0.30 percent to 21,473 (EWH).
European stocks advanced, despite a report from Eurostat, which indicated that the annual inflation rate for the Eurozone dropped to 0.7 percent from February’s 0.8 percent. At this point last year, the inflation rate was 1.8 percent. Because the reading fell further below the European Central Bank’s target of 2 percent, ECB President Mario Draghi could face pressure to make good on his promise that the ECB would intervene with non-standard monetary policy if the strengthening euro became a problem. The euro climbed to 1.3848 per dollar on Monday. The Euro STOXX 50 Index finished Monday’s session with a 1.48 percent jump to 3,049 – which was not enough to reach its 50-day moving average of 3,088. Its Relative Strength Index rose from 35.75 to 44.23 (FEZ).
Technical indicators revealed that the S&P 500 climbed further above its 50-day moving average of 1,829 on Monday, after a 0.96 percent jump to 1,858. Its Relative Strength Index (RSI) climbed from 48.18 to 55.17. The MACD is leveling off below the signal line, suggesting that the S&P could remain in the 1858 – 1860 range during the immediate future.
On Monday, all sectors were solidly in positive territory. The industrial sector made the biggest advance, climbing 1.23 percent.
Consumer Discretionary (XLY): +0.67%
Technology: (XLK): +1.18%
Industrials (XLI): +1.23%
Materials: (XLB): +0.81
Energy (XLE): +0.53%
Financials: (XLF): +1.06%
Utilities (XLU): +0.66%
Health Care: (XLV): +0.98%
Consumer Staples (XLP): +0.59%
Bottom line: Stocks began an important week with a strong start after the Federal Reserve reported that industrial production increased more than expected during February. The week’s big event will take place on Wednesday afternoon, when the FOMC statement is released at the conclusion of its monetary policy meeting. Fed Chair Janet Yellen will hold her first press conference at 2:30 on Wednesday.
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