More Record Highs For The Dow And S&P 500

The Department of Labor’s Bureau of Labor Statistics shocked everyone with its April non-farm payrolls report. Although economists were expecting the unemployment rate to remain at 7.6 percent with 153,000 new non-farm payroll jobs added in April, the BLS report disclosed that 165,000 new jobs were added in April and that the unemployment rate declined to 7.5 percent, without any reduction in the labor force participation rate. Beyond that, February’s total was revised from 268,000 to 332,000 and the March figure was revised from the disappointing 88,000 to 138,000. Even before the opening bell, everyone knew that the S&P 500 would reach a new record high on Friday.

The revisions for February and March meant that 114,000 were added during those months, which had not been previously reported. The good news sent the bulls on a rampage for a seriously “risk on” day.

The Dow Jones Industrial Average (DIA) jumped 142 points to hit 14,973 for an advance of 0.96 percent after breaking above 15,000 for the first time for a record high of 15,002.85. The S&P 500 (SPY) surged 1.05 percent to close at a record high of 1,614.42 after setting a new intraday record high of 1,618.46.

The Nasdaq 100 (QQQ) surged 1.15 percent to 2,944. The Russell 2000 (IWM) soared 1.66 percent to end the day at 955.

In other major markets, oil (USO) jumped 1.55 percent to close at $34.01.

On London’s ICE Futures Europe Exchange, June futures for Brent crude oil advanced by $1.15 (1.12 percent) to $104.00/bbl. (BNO).

June gold futures advanced by 10 cents (0.01 percent) to $1,467.70 per ounce (GLD).

Transports went into warp drive on Friday, with the Dow Jones Transportation Index (IYT) jumping 2.14 percent.

Although developments in the United States are frequently credited for European stock market rallies, on Friday the major European stock markets really did rally in response to American economic data. A review of the charts will reveal that at 8:30 EDT, when the Bureau of Labor Statistics released the surprisingly better-than-expected non-farm payrolls report for April, the major European stock indices spiked (VGK).

The Euro STOXX 50 Index finished Friday’s trading session with a 1.65 percent jump to 2,763 – remaining well above its 50-day moving average of 2,654. After breaking above its overhead resistance level of 2,700 on January 21, the STOXX 50 continues to test resistance at that level, which had been a barrier since the beginning of the year.

In Japan, the Tokyo Stock Exchange was closed on Friday for a national holiday (EWJ).

In China, the bulls went for a run on the Shanghai Stock Exchange in a rebound rally following two days of disappointing PMI data. The Shanghai Composite Index jumped 1.45 percent to 2,205 (FXI). Hong Kong’s Hang Seng Index advanced only 0.10 percent to 22,689 after the HSBC Hong Kong PMI declined to 49.9 in April from 50.5 in March (EWH).

Technical indicators reveal that the S&P 500 is climbing further above its 50-day moving average of 1,557 after hitting a new record-high close of 1,614.42 – motivating bears to hope that we are watching the formation of a head-and-shoulders pattern, which would signal a decline. Its Relative Strength Index advanced from 59.72 to 64.15. The MACD is finally making a further break above the signal line after crossing it last Thursday, suggesting the likelihood of a further advance.

For the day, all sectors finished solidly in positive territory except for the utilities sector, which declined by only 20 basis points. The industrials, materials and industrial sectors led the group, all of which made advances in excess of 1.80 percent.

Consumer Discretionary (XLY): +1.26%

Technology: (XLK): +1.04%

Industrials (XLI): +1.84%

Materials: (XLB): +1.82%

Energy (XLE): +1.81%

Financials: (XLF): +1.07%

Utilities (XLU): -0.20%

Health Care: (XLV): +0.68%

Consumer Staples (XLP): +0.44%

Bottom line: The better-than-expected April non-farm payrolls report, which noted the addition of 114,000 jobs by way of upward revisions for February and March sent both the Dow Jones Industrial Average and the S&P 500 to new record intraday and closing high levels.

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