New Record High Close For S&P 500

Instead of rallying in spite of economic news, the S&P 500 reached a new record-high closing level on Monday because of economic news. The Commerce Department’s Bureau of Economic Analysis reported that although personal income increased by only half as much as expected (0.2 percent), personal consumption expenditures (PCE) rose by twice as much as expected (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

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

The Nasdaq 100 (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: 3,307.02. The Russell 2000 (IWM) rose 0.77 percent to end the day at 942.

In other major markets, oil (USO) skyrocketed 1.51 percent to close at $33.61.

On London’s ICE Futures Europe Exchange, June futures for Brent crude oil advanced by 64 cents (0.62 percent) to $103.80/bbl. (BNO).

June gold futures climbed by $19.70 (1.36 percent) to $1,473.30 per ounce (GLD).

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

All of the major European stock indices surged on Monday, following the news that Italy had finally formed a government under their 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 stock market was closed on Monday for a national holiday (EWJ).

In China, the Shanghai Stock Exchange is closed until May 2 for the May Day holidays (FXI). Hong Kong’s Hang Seng Index advanced 0.15 percent to 22,580 (EWH).

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 bears to hope that we are 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 the materials and technology sectors taking a decisive lead. The industrials sector and consumer staples sector were the laggards, advancing 46 percent and 27 percent, respectively.

Consumer Discretionary (XLY): +0.35%

Technology: (XLK): +1.43%

Industrials (XLI): +0.46%

Materials: (XLB): +1.52%

Energy (XLE): +1.01%

Financials: (XLF): +0.48%

Utilities (XLU): +0.90%

Health Care: (XLV): +0.38%

Consumer Staples (XLP): +0.27%

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

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