Major Index ETFs Advance To New Records On Upbeat Economy

Ulli Market Commentary Contact

Thur pic

[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.

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Bernanke’s Reassurance On Stimulus Lifts Stocks

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

The major U.S. equity ETFs finished trading with modest gains after a choppy session, amid the Federal Reserve Chairman Bernanke reiterating in Congressional testimony, that the Central Bank’s asset purchases could be increased or reduced depending on the health of the economic recovery.

Supporting the up-down session were an unanticipated declines in domestic building permits and housing starts, the release of the Fed’s Beige Book that revealed the US economy maintained a “modest to moderate pace” of growth, while mortgage applications declined for the fifth-straight week.

Stocks opened the session in positive territory after Fed Chairman Ben Bernanke delivered his two-day semi-annual congressional testimony in front of the House Financial Services Committee. Bernanke noted that the economy continues to recover at a moderate pace, noting a significant contribution from housing, while acknowledging a gradual improvement in the labor market. However, the jobs situation is “far from satisfactory.”

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7 ETF Model Portfolios You Can Use – Updated through 7/16/2013

Ulli Model ETF Portfolios Contact

Risk-on was the mode of the past five trading days as the S&P 500 added another 1.45% during this latest run into record territory.

Of course, as I have posted relentlessly, economic fundamentals have nothing to do with this current lift-a-thon, but it had everything to do with what the Fed said and didn’t say in regards to the potential tapering of its QE efforts.

Such is the world we’re living in and the only reality to me are the major trends; either up, down or sideways. As you know, we recently got stopped out of some of our model ETF portfolio holdings, but this was the week where a reversal occurred, at least in some of our former positions, which were now added back in as they broke their long-term trend lines to the upside.

How long that will last is everyone’s guess, but much of the future direction may depend on the interpretation of Bernanke’s semi-annual testimony on Capitol Hill later on today.

Here’s the latest ETF Model Portfolio update:

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Markets Pull Back Awaiting Fed Chief’s Statement

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

The longest rally in the Standard & Poor’s 500 Index (SPY) since January came to a halt today in the wake of a mixed bag of economic and earnings news. Tomorrow’s looming semi-annual testimony on Capitol Hill by Federal Reserve Chairman Ben Bernanke may also have contributed to a bit of caution on the Street. The market’s pullback came a day after both the Dow and the S&P 500 ended at record closing highs for the third consecutive session.

Goldman Sachs Group (GS) and Dow member Johnson & Johnson posted better-than-expected results but fellow Dow component Coca-Cola fell short on its revenue figure as a result of lower-than-anticipated volumes. GS gets the gold so far for the biggest beat among the big banks while Dow member Johnson & Johnson posted earnings of $1.48 a share when estimates were for $1.39. Revenue was $17.9 billion beating expectations of $17.7 billion.

Cyclical sectors underperformed with energy and materials leading to the downside. The energy space shed 0.6% while crude oil slipped 0.5% to $105.78 per barrel. Elsewhere, discretionary shares suffered from broad weakness as homebuilders and retailers lagged. Defensively-oriented sectors finished in mixed fashion. Telecom services outperformed with a gain of 0.6% while health care and utilities each lost 0.5%. For its part, the consumer staples sector ended in-line with the broader market. Today market activities were also influenced by economic releases, such as the following.

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Bulls Open The Week With Lack Of Participants

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

An unexpected improvement in U.S. regional manufacturing activity, a rise in business inventories, and an inline 2Q GDP report out of China, was the U.S. equities neede to continue their gains to open the week.

The Standard & Poor’s 500 Index (SPY) settled higher to mark its eight consecutive advance, the longest winning streak since January. The Dow Jones industrial average finished at record closing highs for the third consecutive session. The Nasdaq scored its highest close since September 2000. Volume though was at the lowest level of any full trading day this year.

The release of weak retail sales curbed today’s advance. Retail sales rose 0.4% in June, below the consensus of 0.8%, a sign of consumer fatigue likely due in part to sequester-related furloughs. Retail sales increased at a 3.3% annual rate in Q2, below the 4.2% rate in Q1. This suggests consumer spending would likely be a smaller contributor to GDP growth in Q2 than it was in Q1. Although disappointing, the trends remain positive.

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