Stocks Get Another Boost From Economic Data

Stocks continued their routine of reaching new record highs after Monday’s economic reports encouraged investors.  

Economic data pushed stock prices higher again on Monday, after Friday’s third estimate of third- quarter GDP from the Bureau of Economic Analysis showed GDP expansion at a 4.1 percent annual rate. On Monday, the final Thompson Reuters / University of Michigan Consumer Sentiment Index for December held to the preliminary reading of 82.5, compared with November’s 75.1. Nevertheless, the result fell a tad short of economists’ expectations for an increase to 83.0.
 
Also on Monday, the Bureau of Economic Analysis released its Personal Income and Outlays report for November. The report indicated that “Real PCE” (personal consumption expenditures, adjusted to remove price changes) increased by 0.5 percent in November, consistent with economists’ expectations. October’s increase was 0.4 percent. Although personal income increased by 0.2 percent in November compared with October’s -0.1 percent, the November reading fell short of economists’ expectations for an increase of 0.5 percent.
 
The Chicago Federal Reserve National Activity Index (CFNAI) for November climbed to +0.60 from October’s -0.07. More important, the CFNAI’s three month moving average rose to +0.25 from October’s +0.12 for the highest reading since February of 2012.
 
The Dow Jones Industrial Average (DIA) picked up 73 points to finish Monday’s trading session at a new, record-high close of 16,294.61 for a 0.45 percent advance, after hitting a record intraday high of 16,318.11. The S&P 500 (SPY) climbed 0.53 percent to finish at a new, record-high closing level of 1,827.99, after hitting a record intraday high of 1,829.75.
 
The Nasdaq 100 (QQQ) jumped 1.08 percent to finish at 3,569. The Russell 2000 (IWM) soared 0.94 percent to end the day with a record-high close at 1,157.22 after hitting a new record intraday high of 1,213.49.
 
In other major markets, oil (USO) declined 0.34 percent to close at $35.36.
 
On London’s ICE Futures Europe Exchange, February futures for Brent crude oil declined 12 cents (0.11 percent) to $111.65/bbl. (BNO).
 
February gold futures declined $5.60 (0.47 percent) to $1,198.10 per ounce (GLD).
 
Transports had to increase cabin pressure as they continued to fly higher on Monday, while the Dow Jones Transportation Average (IYT) climbed 0.24 percent.
 
In Japan, the stock market was closed for the Emperor’s Birthday holiday (EWJ).
 
Stocks ended their nine-day losing streak in mainland China thanks to the bird flu. Anxiety over a suspected bird flu outbreak sent pharmaceutical stocks soaring to help bring back a little bullishness to the Chinese stock market. The Shanghai Composite Index advanced 0.24 percent to 2,089 (FXI). Hong Kong’s Hang Seng Index climbed 0.48 percent to end the day at 22,921 (EWH).
 
In Europe, stocks continued to advance for a fourth consecutive session, as bullish sentiment was fueled by a number of mergers and acquisitions, involving companies with names which would be unfamiliar to most Americans.
 
The Euro STOXX 50 Index finished Monday’s session with a 0.71 percent surge to 3,070 – climbing further above its 50-day moving average of 3,027. Its Relative Strength Index is 59.80 (FEZ).
 
Technical indicators revealed that the S&P 500 climbed further above its 50-day moving average of 1,776 after advancing 0.53 percent to finish Monday’s session at a new, record-high closing level of 1,827.99. Its Relative Strength Index rose from 62.83 to 65.77. The MACD is climbing above the signal line, which would suggest that the S&P should continue to advance during the immediate future.
 
On Monday, most sectors advanced except for the utilities and consumer staples sectors, which declined by 0.40 percent and 0.09 percent, respectively.
 
Consumer Discretionary (XLY):  +0.44%
 
Technology:  (XLK):  +1.32%
 
Industrials (XLI):  +0.39%
 
Materials: (XLB):  +0.49%
 
Energy (XLE):  +0.10%
 
Financials: (XLF):  +0.49%
 
Utilities (XLU):  -0.40%
 
Health Care: (XLV):  +0.38%         
 
Consumer Staples (XLP):  -0.09%
 
Bottom line:  Monday morning’s release of three positive economic reports helped sustain the bullish momentum sparked by Friday’s better-than-expected report on third quarter GDP, with the Dow, the S&P 500 and the Russell 2000 all hitting new record intraday and closing high levels.   
 
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