Major Index ETFs Advance To New Records On Upbeat Economy

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[Chart courtesy of MarketWatch.com]

U.S. equity index ETFs closed higher today thanks to mostly upbeat economic data, stronger-than-expected reported earnings from IBM, UnitedHealth Group, and Morgan Stanley, along with Fed Chairman Bernanke’s comments further reassuring markets.

The Dow Jones Industrial Average and the Standard & Poor’s 500 Index closed at record highs; with the S&P 500 notching a fresh intraday record of 1693.13. Meanwhile, the tech-heavy Nasdaq underperformed, ending unchanged. In light volume, more than 6 billion shares traded hands on U.S. exchanges today, or 5.4 percent below the three-month average. Today’s economic calendar was packed with many important releases.

Stocks advanced at the open and received an additional boost after the July Philadelphia Fed general business activity index rose 7.3 points in July to 19.8, the highest level since March 2011, as manufacturing activity in the region strengthened. Economists expected a reading of 7.7. Most individual indexes pointed to expansion. Notably, the employment index rose 13.1 points, the most since December 2003, to 7.7.

On that note, weekly initial jobless claims fell by 24,000 to 334,000 last week, below the 345,000 level that economists surveyed had expected. Moreover, the four-week moving average, considered a smoother look at the trend in claims, declined by 5,250 to 346,000.

Meanwhile, the Conference Board’s Leading Economic Index (LEI) was unchanged in June, below the consensus of 0.3%. Half of its ten components improved. The biggest positive contributor was the interest rate spread, while the biggest negative contributor was building permits.

And finally, the Consumer Comfort Index fell 1.1 points last week, its first decline in five weeks, to -28.4, led by personal finances. Rising gasoline prices and stagnant wages likely weighed on sentiment. Even so, consumer comfort and its components continue to increase on a 52-week average basis, indicating a positive trend. How did the market find direction from these data points?

The S&P was able to register to a new intraday high as the heavily-weighted energy, financial, and industrial sectors all logged gains of at least 0.9%. The financial space led the way with a gain of 1.3% as just about every large component settled in positive territory.

Elsewhere, the energy sector rose 0.9% as crude oil jumped to its highest level of the year. Despite the continued rise in oil, the relative strength of the bellwether complex helped the industrial sector finish among the leaders. The benchmark average settled below its session high due to weakness in technology. The tech sector shed 0.3% as eBay and Intel weighed following the release of their quarterly results.

Our Trend Tracking Indexes (TTIs) joined the march upward with the Domestic TTI closing at +3.41%, while the International TTI ended the day at +7.07%.

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