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Dow, S&P Set New Record Highs on Strong Data, Q1

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After blowout economic numbers this morning on both March Retail Sales and weekly Jobless Claims, market bulls were reactivated. Leading the way was the Nasdaq, +1.3%, led by a 1.8% gain in the Tech sector. The Nasdaq is now back within one percentage point of its all-time trading high set last fall. Meanwhile, the Dow gained 305 points, +0.9%, to a new record high and above 34K for the first time. The S&P, +1.1%, also struck a new all-time closing high. The Russell 2000 was +0.4% on the day.

This was a fitting result to a day that not only saw the bottom fall out in weekly jobless claims, but Retail Sales beat last month’s estimate by more than 350 basis points. Even further, Q1 earnings season is enjoying itself strong beats over estimates and gaining year-over-year revenues. This goes not only for Big Banks like Bank of America (BAC - Free Report) today and Goldman Sachs (GS - Free Report) yesterday, but across the board. Currently, 88% of S&P 500 companies already reported have beaten, and by an average of more than 20%.

This will no doubt subside to a certain extent, as banking stocks are doing exceptionally well from high savings rates and mortgage activity. The good news is, this economic growth we’ve dipped a toe into is not a zero-sum game; with such pent-up demand across most, if not all, industries, we don’t expect any group except perhaps Q1 Airlines results to offer much disappointment. For instance, just today Real Estate gained nearly 2% as a segment.

We’ll get new Housing Starts and Building Permits data Friday morning, whereby we expect to see numbers picking up with spring upon us (these will be March numbers). That said, what’s been keeping this industry back in recent months is its own supply and demand challenges: with materials costs spiraling upward and existing home owners not readily putting their places on the market, we imagine the story will once again be relative low inventory.

From there, everything will pivot on Q1 earnings season. So far, only 40 companies from the S&P 500 have released results, but the pace will pick up notably as of Monday. There will also be a dearth of monthly economic reads; today’s high total of Retail Sales, Jobless Claims, Empire State, Philly Fed, Industrial Production and Capacity Utilization seems to have provided a near-term purge of sorts. So if you like this sort of thing, we hope this morning was enjoyable for you.

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