U.S. Stocks Extend Yesterday’s Rally, Dow And S&P 500 Set New Record Highs

Extending the rally seen in the previous session, stocks moved mostly higher over the course of the trading day on Friday. With the continued upward move, the Dow and the S&P 500 once again set new record closing highs.

The Dow climbed 164.68 points or 0.5 percent to 34,200.67 and the S&P 500 rose 15.05 points or 0.4 percent to 4,185.47. Meanwhile, the tech-heavy Nasdaq posted a more modest gain, inching up 13.58 points or 0.1 percent to 14,052.34.

The major averages all posted notable gains for the week. The S&P 500 surged up by 1.4 percent, while the Dow and the Nasdaq jumped by 1.2 percent and 1.1 percent, respectively.

Stocks continued to benefit from yesterday’s strong U.S. economic data, with upbeat economic data from China adding to optimism about a global economic recovery.

A report from the National Bureau of Statistics showed the Chinese economy saw record growth in the first quarter, as GDP spiked 18.3 percent year-over-year.

Upbeat earnings news also generated continued buying interest, as Morgan Stanley (MS) joined other financial giants in reporting better than expected first quarter earnings.

On the U.S. economic front, the Commerce Department released a report showing a substantial rebound in new residential construction in the month of March.

The Commerce Department said housing starts skyrocketed by 19.4 percent to an annual rate of 1.739 million in March after plunging by 11.3 percent to a revised rate of 1.457 million in February.

Economists had expected housing starts to spike by 13.5 percent to a rate of 1.613 million from the 1.421 million originally reported for the previous month.

With the bigger than expected increase, housing starts reached their highest level since hitting an annual rate of 1.802 million in June of 2006.

Meanwhile, the University of Michigan released a report showing sentiment has continued to improve in April but by much less than anticipated.

The preliminary report showed the consumer sentiment index rose to 86.5 in April after soaring to 84.9 in March. Economists had expected the index to jump to 89.6.

Despite the much smaller than expected increase, the consumer sentiment index still reached its highest level since hitting 89.1 in March of 2020.

Sector News

Housing stocks showed a strong move to the upside following the housing starts data, with the Philadelphia Housing Sector Index climbing by 2.1 percent to its best closing level since a two-for-one split in early 2006.

Significant strength was also visible among chemical stocks, as reflected by the 1.3 percent gain posted by the S&P Chemical Sector Index. The index ended the day at a record closing high.

Steel stocks also turned in a strong performance on the day, resulting in a 1.2 percent advance by the NYSE Arca Steel Index. The gain lifted the index to its best closing level in almost ten years.

Meanwhile, oil service stocks continued to give back ground amid a decrease by the price of crude oil, with the Philadelphia Oil Service Index falling by 1.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.

The major European markets also moved to the upside on the day. While the German DAX Index surged up by 1.3 percent, the French CAC 40 Index jumped by 0.9 percent and the U.K.’s FTSE 100 Index rose by 0.5 percent.

In the bond market, treasuries are giving back ground after ending the previous session sharply higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5 basis points at 1.580 percent.

Looking Ahead

Following the slew of U.S. economic released over the past few days, the economic calendar is relatively quiet next week. Traders are still likely to keep an eye on reports on new and existing home sales and weekly jobless claims.

Meanwhile, earnings season will pick up steam next week, with Coca-Cola (KO) IBM (IBM), Johnson & Johnson (JNJ), Netflix (NFLX), AT&T (T), Intel (INTC), American Express (AXP) and Honeywell (HON) among the companies due to report their quarterly results.