The Relentless Equity March Continues; Europe Slips

[Chart courtesy of MarketWatch.com]

US stocks gained Tuesday with the S&P 500 and the Dow finishing at fresh five-year highs amid better-than-expected quarterly results from corporations including insurer and Dow component Travelers Cos Inc.

Equity averages were briefly dented earlier, offering the only buying opportunity of the day, after a report from the National Association of Realtors showed US existing-home sales dipped one percent to a 4.94 million annual clip in December. The trade-group report followed a release from real-estate provider Zillow Inc., which showed US home prices rose 5.9 percent last year.

Meanwhile, House Republicans are set to vote Wednesday on raising the US debt limit through mid-May, a move the White House has welcomed ahead of the budget debate.

The Dow Jones Industrial Average (DJIA) zoomed 62 points to its highest level since December 10. The S&P 500 Index (SPX) rose 7 points to 1493 with materials and financial fronting the gains and consumer staples the sole laggard among its 10 business groups.

Treasury prices moved up, pushing yields down Tuesday after sales of existing homes declined unexpectedly in December to raise doubts on the much talked-about US real-estate recovery.

The US dollar retreated Tuesday as the Japanese yen jumped against the greenback after investors learned the planned assets purchase by the Bank of Japan will start later than anticipated. The US unit lost ground against the euro as well following a stronger-than-forecast survey of German economic sentiment.

European stock markets edged lower Tuesday as a surge in German investor confidence was offset by the Bank of Japan’s latest policy move.

The mood turned sour after the Bank of Japan’s new approach to monetary stimulus didn’t live up to the headlines. The central bank said it would introduce a formal two percent inflation target and initiate a US Fed-style open-ended monetary easing policy in January 2014.

The move, though qualitatively significant, was termed as quantitatively timid.

In the ETF space, commodity-linked funds mostly logged in gains in today’s session. Natural gas weakened after an early rally on weather-related demand.

The Teucrium Soybean Fund (SOYB) rose 1.5 percent on concerns over dry outlook for parts of South America.

The iShares Dow Jones US insurance Index Fund (IAK) was one of the best performers, adding 2.05 percent on the day after Travelers Cos Inc reported results that beat estimates. The State Street Select Sector SPDR-Financial (XLF) also rallied, adding 0.93 percent on the day.

Our Trend Tracking Indexes (TTIs) inched higher with the markets and closed the day with the Domestic TTI sitting at +3.29% while the International TTI rallied to +10.58%.

 

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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