S&P 500 and Dow Finish High: Will...
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Jonathan Yates
S&P 500 and Dow Finish High: Will Liquidity Keep Stocks Aloft?

Strong economic news had the Standard & Poors 500 Index (NYSE: SPY) and Dow Jones Industrial Average (NYSE: DIA) ending a record first quarter as individual investors continued to return to the stock market.  As the chart below shows, both the two major stock markets have been on an upward trend for the new year.



Oil prices (NYSE: USO) moved higher, too, due to projected economic growth in the United States of 2.5%, up from 0.4% for the fourth quarter of 2012.  Housing prices are also rising.  The Chinese are also bullish on America, buying record amounts of US Dollar assets in January.   Concern was raised by the strong demand that resulted in traditionally defensive stocks such as utilities and health care companies leading the rally.  But gold (NYSE: GLD), the historic safe haven asset, fell after finally topping $1600.00.

There are also more concerns emanating from Washington, DC.  While sequestration not devastated the economy as feared by so many, there are more budget cuts coming.  Across The Pond, the Eurozone debt crisis is nowhere over.  Troubles in Cyprus, a tiny island nation of just 1.1 million, have been a drag on global bourses in recent market action.

But the bullish news continues on the lower tip of the isle of Manhattan.  Stocks on The Big Board hitting a new high outnumbered those bottoming out at a new low by better than 15-to-1.   Gainers led losers by 3686 to 2410.  In a fitting end to the end of trading, the market finished with a very long, positive candlestick pattern after dipping mid-day from a strong start.  This has been a market for momentum traders in a liquidity-driven atmosphere that Federal Reserve Chairman Ben Bernanke has stated in testimony before Congress will remain for years, to the delight of Wall Street.


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