Better-than-expected domestic data and encouraging international political developments propelled benchmarks into positive territory. Meanwhile, investor enthusiasm for a couple of sectors catapulted the S&P 500 and the Nasdaq to new highs. All the S&P 500 industry groups finished in the green, among which, materials stocks emerged as the biggest gainer.
The Dow Jones Industrial Average (DJI) increased 0.7% to close the day at 14,818.75. The S&P 500 gained 0.7% to finish yesterday’s trading session at 1,593.61. The tech-laden Nasdaq Composite Index rose 0.9% to end at 3,307.02. The fear-gauge CBOE Volatility Index (VIX) gained 0.7% to settle at 13.71. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.1 billion shares, well below 2012’s average of 6.48 billion shares. Advancing stocks outnumbered the decliners. For the 73% that advanced, 24% declined.
The S&P 500 closed at an all-time high while the tech-laden Nasdaq rose to its highest level in more than a decade after investors turned bullish towards the energy and technology sectors. Continuation of monetary support, in light of low inflation from the Federal Reserve and expectations of rate cuts from the European Central Bank (ECB) added to investor confidence.
Meanwhile, better-than-expected housing data also lifted investor sentiment. According to the National Association of Realtors, pending home sales improved in March. In percentage terms, pending home sale increased 1.5% to 105.7 from 104.1 in February and is 7% higher on a year-over-year basis. This was higher than the consensus estimate of 0.7%. According to the U.S. Department of Commerce, personal income and disposable personal income (DPI) each increased 0.2% in comparison to an increase of 1.1% each in personal income and DPI, in February. The PCE inflation for March decreased 0.1% versus an increase of 0.4% in the previous quarter.
Investors also received a boost from the formation of a new government in Italy. After two months of a political gridlock, Italy finally formed a government and Enrico Letta was sworn in as Italian Prime Minister on Sunday. Letta laid emphasis on reviving growth and increasing employment in Italy. He added that he plans to ease taxes on young and new employees; cancel planned raise in the value-added tax and restructure the property tax. He also said bringing about tax reforms without increasing debt would be difficult.
On the earnings front, shares of Roper Industries, Inc. (NYSE:ROP) lost 3.8% after its revenue missed the Street’s estimates. Shares of Health Net, Inc. (NYSE:HNT) increased 4.6% after its earnings soared past the Street’s expectations. Adjusted earnings per share (EPS) were recorded at $0.62 in comparison to the Street’s expectation of $0.41. The company’s revenue of $2.8 billion marginally beat estimates of $2.79 billion.
According to Thomson Reuters, about 274 S&P 500 companies have released earnings of which 69% have beaten the Street’s expectations and 43.2% have registered revenues above estimates.
Of the top ten S&P 500 industry groups, materials stocks were the biggest gainers. The Materials Select Sector SPDR (XLB) gained 1.5%. Stocks such as Monsanto Company (NYSE:MON), the Dow Chemical Company (NYSE:DOW), E I Du Pont De Nemours And Co (NYSE:DD), FMC Corp (NYSE:FMC) and Praxair, Inc. (NYSE:PX) increased 1.7%, 1.4%, 2.3%, 1.3% and 1.5%, respectively.