[Chart courtesy of MarketWatch.com]
The Standard & Poor’s 500 Index extended its rally to a fifth day as major U.S. equity indices closed the trading day positive. For much of Thursday, markets were boosted by a number of earnings beats and encouraging jobless numbers from the Labor Department; but gave back some gains late after reports that Germany’s central bank president announcement that he doesn’t support the ECB’s Outright Monetary Transactions program.
The day started with some good news. Initial claims for unemployment insurance fell 16,000 last week to 339,000, the second lowest level since February 2008. Economists forecasted a fall to 350,000 claims. The decline is a welcome sign the labor market is gradually improving. The level of claims remains consistent with moderate gains in payrolls. The 4-week average of claims ticked down 4,500 to 357,500, indicating a downward trend.
Continuing claims for unemployment dropped 93,000, the most since January 2012, to 3.0 million, while the insured jobless rate fell to 2.3% from 2.4%. Both were at their lowest levels since the summer of 2008.
In earnings news, continuing a pattern we’ve seen quite a bit this earnings season, most companies are beating profit estimates, even when revenues are down. Dow member Exxon Mobil fell over 1% after beating on earnings even though it missed on revenues. Exxon, the largest U.S. company by market capitalization, saw its oil and gas production both fell.
Another Dow component 3M fell nearly 3% on the company’s disappointing quarterly report where revenues were almost $200 million below the consensus. Meanwhile, Dow member Johnson & Johnson raised its dividend for the 51st consecutive year. United Parcel Service, Dow Chemical Co and Qualcomm posted mixed results.
Crude oil increased to $93.64 per barrel, and gold advanced to $1,463.81 per ounce. The Conference Board’s CEO Confidence Index rose eight points to 54 in Q1, the highest level in a year. The current level of business confidence has historically been consistent with moderate growth in corporate profits, and in line with the outlook for the year.
Besides the continuing mess in Europe, are we seeing some clear direction ahead? I sure don’t see it as the economic waters continues to be murky while the stock market levels are about as disconnected from reality as you can get.
Nevertheless, the trend is up, and we will follow it until the end, when it bends, which will result in our trailing sell stops being triggered. In the meantime, our Trend Tracking Indexes (TTIs) inched up with the Domestic TTI lurking at +3.77% while the International TTI ended this day at +7.85%.
For all the latest charts and momentum numbers, please see the most recent StatSheet, which I will post within a couple of hours.