Stocks extended their winning streak to 6 sessions on Tuesday as the S&P 500 continued its strongest rally of 2014. After rising to within 6 points of its all-time high, the S&P 500 surrendered some of its gains to close at 1880, a 0.4% rise from the previous day.
On the macro front, the most important data-point yesterday was Existing Home Sales. Sales of previously owned homes fell in March for a third consecutive month to an annual rate of 4.59 million units, the lowest level in more than 18 months. However, the number was still better than analysts’ expectations of 4.55 million.
The other important data point yesterday was the Richmond Fed manufacturing index, which rebounded to +7 in April from -7 in March. This was much better than economists’ forecast of 2. The components of the survey also were positive, as new orders and shipments gained 19 and 15 points, respectively.
On The Hammerstone Forum
We had mentioned earlier that many participants on the Hammerstone Forum were playing a wait-and-see game before taking positions in the hard-hit momentum names, and from the recent comments on the forum, it seems that many investors are ready to take on more risk on the back of a generally improved sentiment and positive earnings numbers thus far. In fact, there was so much interest in one particular momentum name that one of the forum participants talked about taking a contra position in the stock based on such huge interest.
After in-line Existing Home Sales yesterday, we will get more housing data in the form of New Home Sales at 10AM ET. Also coming up in the U.S.: Durable Goods Orders, Claims (tomorrow); and Markit US Services PMI and U. Michigan Confidence (Friday.)
Although we have had a generally positive earnings season thus far, the earnings and guidance by some of the high-growth names last night were disappointing. Tonight is going to be very important for tech earnings with AAPL, FB, QCOM, and TXN reporting after close. Disappointing figures from these names could potentially be a reason to lead the market lower after the recent quick spike. Other earnings this week include: AAL, CAT, GM, MMM, UPS, VZ, AMZN, BIDU, BRCM, LVS, MSFT, P, SBUX, V (tomorrow); and F (Friday.)
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