Stocks Soar On Economic Data From China, Japan And News From Syria

Surprisingly upbeat economic data from China and Japan got stocks off to a solid start on Monday, as investors were feeling a bit less anxious about the global economy. Investor bullishness was fueled by an afternoon report that Russian Foreign Minister Sergey Lavrov was enthusiastic about a suggestion made by Secretary of State John Kerry to resolve the Syrian situation through diplomacy. The State Department was quick to characterize Kerry’s statement as “hypothetical” because our Nobel Peace Prize-winning President will be making the case for war on Tuesday evening. Kerry suggested that Syria should turn its chemical weapons over to Russia for destruction. Both Russia and Syria expressed amenability to the idea.

The Dow Jones Industrial Average (DIA) gained 140 points to finish Monday’s trading session at 15,063 for a 0.98 percent surge. The S&P 500 (SPY) jumped exactly one percent to close at 1,671.

The Nasdaq 100 (QQQ) soared 1.17 percent to finish at 3,169. The Russell 2000 (IWM) jumped 1.61 percent to end the day at 1,046.

In other major markets, oil (USO) sank 1.07 percent to close at $38.94.

On London’s ICE Futures Europe Exchange, November futures for Brent crude oil fell $2.65 (2.32 percent) to $111.77/bbl. (BNO).

December gold futures declined 20 cents (0.01 percent) to $1,386.30 per ounce (GLD).

Transports were flying over Area 51 on Monday, as the Dow Jones Transportation Average (IYT) soared 1.57 percent.

In Japan, stocks soared on news that the country will be hosting the Radioactive Olympics in 2020. Property developers and construction companies led the advance. The announcement was followed by a report that the nation’s second quarter GDP was revised upward from a 2.6 percent rate of annual expansion to a shocking, 3.8 percent rate. The news was seen as a big victory for Abenomics. The yen became the yenny again, weakening as far as 100.11 per dollar during Monday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average soared 2.48 percent to 14,205 (EWJ).

In China, stocks advanced after the General Administration of Customs announced a $28 billion trade surplus during August. Exports jumped 7.2 percent compared with economists’ expectations for a 5.5 percent increase. The nation’s Consumer Price Index rose 2.6 percent as expected. The financial sector led the day’s advance on rumors that banks would be allowed to issue preferred shares. The Shanghai Composite Index skyrocketed 3.39 percent 2,212 (FXI). Hong Kong’s Hang Seng Index advanced 0.57 percent to end the session at 22,750 (EWH).

In Europe, stocks made a slight retreat as investors remained anxious about the situation in Syria (VGK). The day’s leaders included Christian Dior, which jumped 2.8 percent after announcing a share buyback. Vallourec skyrocketed 3.6 percent on an upgrade from “hold” to “buy”. The Euro STOXX 50 Index finished Monday’s session with a 0.18 percent decline to 2,798 – remaining above its 50-day moving average of 2,750. Its Relative Strength Index is 53.96 (FEZ).

Technical indicators revealed that the S&P 500 finally broke above its 50-day moving average of 1,666 after finishing Monday’s session with a 1.00 percent advance to 1,671. Although a head-and-shoulders pattern appeared on the S&P chart, from the period beginning in early May through September 6, the S&P has now broken the neckline of the pattern. (There had been a pinhead-and-shoulders pattern running from the period beginning on July 10 through August 16 and the S&P would have to rise above 1,695 to break the neckline of that pattern.) Its Relative Strength Index jumped from 48.52 to 55.93. Although the MACD is below the zero line, it is headed back upward, crossing above the signal line on Monday. The move will be seen as an indication of a likely advance.

For Monday, all sectors were solidly in positive territory. The materials sector led the group with a 1.51 percent advance.

Consumer Discretionary (XLY): +0.89%

Technology: (XLK): +1.20%

Industrials (XLI): +1.25%

Materials: (XLB): +1.51%

Energy (XLE): +1.12%

Financials: (XLF): +1.16%

Utilities (XLU): +0.35%

Health Care: (XLV): +0.62%

Consumer Staples (XLP): +0.70%

Bottom line: A surprising jump in Japan’s GDP expansion to a rate of 3.8 percent combined with a 7.2 percent jump in China’s exports during August to start Monday’s trading session on a bullish note. An afternoon report about the possibility of a diplomatic resolution to the Syrian situation pushed stocks even higher.

Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector's Disclaimer, Terms of Use, and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.