With traders reacting to some better than expected economic data, the U.S. stock markets are seeing considerable strength in mid-afternoon trading on Monday. The major averages are all firmly in positive territory, with the S&P 500 near the psychologically important 900 level.
In an interview with RTT News, Marc Pado, U.S. market strategist at Cantor Fitzgerald, said the current market has the critical parts for a new bull market, highlighting excellent leadership, good internal rotations, and good volume.
However, he warned that doesn't mean we won't pull back, noting that the impressive move higher is pushing toward the extreme.
While Pado predicted that the market would need to correct its overbought condition with a month or two of sideways trading, he said the S&P has a good shot at 1,050-1,100 by the end of the year.
The continued strength in the markets comes as traders react to a report from the National Association of Realtors showing a substantial increase in pending home sales along with a Commerce Department report showing an unexpected increase in construction spending.
NAR said its pending home sales index rose 3.2 percent in March following a revised 2.0 percent increase in February. Economists had expected the index to come in unchanged following the 2.1 percent increase originally reported for the previous month.
Separately, the Commerce Department said construction spending unexpectedly rose 0.3 percent in March following a 1.0 percent decrease in February. The increase surprised economists, who had expected spending to fall by about 1.6 percent.
Buying interest has waned somewhat from earlier in the day, however, perhaps due in part to comments from President Barack Obama indicating that his administration is working to reform the tax system and crack down on illegal overseas tax evasion.
The president said his administration's efforts to crack down on offshore tax evasion, which he called the largest tax scam in the world, would raise $210 billion over the next ten years.
The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is currently up 185.26 at 8,397.67, the Nasdaq is up 30.15 at 1,749.35 and the S&P 500 is up 21.57 at 899.09.
Nearly all of the Dow components are trading in positive territory, contributing to the standout gain being shown by the blue chip index. Of the thirty Dow components, currently only Microsoft (MSFT) is in the red.
Reflecting strength in the banking sector, Bank of America (BAC) is turning in one of the Dow's best performances, with the financial service provider currently up 12.5 percent. Nonetheless, shares of Bank of American remain stuck in a recent trading range.
Semiconductor giant Intel (INTC) has also shown a strong upward move after Morgan Stanley upgraded its rating on the company's stock to Overweight from Equal-weight. Intel is currently up 5.4 percent after reaching a six-month intraday high.
American Express (AXP), Alcoa (AA), and DuPont (DD) are among the other Dow components posting notable gains. Shares of AmEx are up currently up 9.9 percent, while shares of Alcoa are up 7.2 percent and shares of DuPont are up 5.5 percent.
Meanwhile, Microsoft is currently posting a modest loss, with the software giant currently down 0.1 percent. However, shares of Microsoft are well off their worst levels of the day.
As mentioned above, banking stocks are turning in some of the market's best performances amid some optimism about the outcome of the government's stress tests. The S&P Banks Index is currently posting a substantial gain, up 13.4 percent.
Within the sector, MGIC Investment (MTG) is posting a particularly strong gain, with the mortgage insurer currently up 24.2 percent. With the gain, MGIC has risen to its best intraday level in well over three months.
Steel, transportation, and housing stocks are also experiencing considerable strength amid expectations of an economic recovery. Among housing stocks, M/I Homes (MHO) is up 13.5 percent after reaching a six-month intraday high.
Most of the other major sectors have also shown strong upward moves, reflecting broad based strength in the markets. Gold, oil service, and natural gas stocks are posting notable gains amid increases in the prices of their related commodities.
In overseas trading, stock markets across the Asia-Pacific region closed considerably higher on Monday, as traders reacted positively to a report showing an expansion in Chinese manufacturing. However, the Japanese market remained closed for a national holiday.
The major European markets also turned in strong performances, with the French CAC and the German DAX Index advancing 2.5 percent and 2.8, respectively. Nonetheless, the market in London was closed due to a holiday.
In the bond market, treasuries continue to show a lack of direction, unable to sustain any significant moves. Subsequently, the yield on the ten-year note is currently down less than a basis point at 3.167 percent.
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