Stocks are off to a strong start for the year. The major U.S. indices are hitting new 52-week highs on positive economic data both here in the U.S. and in China. A decline in the U.S. dollar is fueling gains in commodity-related stocks. Crude oil is breaking out past $80. Overall it's a widespread rally with the RLX retail sector the only index not in positive territory.
Asian markets were mixed. Last night a weaker yen fueled gains for Japanese exporters. The Japanese NIKKEI index rose 1% to closet at new 15-month highs. In China the latest manufacturing report came in better than expected but investors sold the news. The Hong Kong Hang Seng lost 0.23% and the Chinese Shanghai index lost 1.0%.
European stocks were in a better mood. Stocks started the day strong and accelerated higher on the U.S. ISM data. Commodity stocks and financials were some of the best performers. The German DAX rose 1.5%, the English FTSE rose 1.6%, and the French CAC-40 rallied 1.9% with most of these markets hitting new 15-month highs.
The big report in the U.S. this morning was the national factory activity index by the Institute for Supply Management. Economists were expecting a reading at 54.3 with readings over 50 indicating growth. The December number came in at 55.9, the highest level since April 2006. This was the fifth monthly gain in a row. ISM said their new orders component rallied from 60.3 in November to 65.5 in December, which is the highest reading in five years. The big gains in the ISM completely overshadowed a disappointing report on construction activity. The Commerce Department said construction activity in November declined for the seventh month in a row with a 0.6% drop compared to analysts' estimates for a 0.4% decline.
Semiconductors got a boost this morning after Intel (INTC), a DJIA and NASDAQ-100 component, was upgraded to an "out perform". The SOX semiconductor index is up 1.8% and hitting new 52-week highs. Oil service stocks also garnered some positive analyst comments and some of the refiners received upgrades. Combined with the rally in oil and we're seeing a 3.7% gain for the OSX oil services index and a 2.6% gain for the OIX oil index.
The dollar's weakness helped push crude oil to an intraday high of $81.69 a barrel. Meanwhile gold futures are seeing a big bounce with a $22 gain to $1,118 an ounce. Copper is hitting new 52-week highs and silver is up 4% on the session. The S&P 500, the NASDAQ composite, the Dow Industrials and the small cap Russell 2000 are all hitting new 52-week highs.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
A quick scan of the OptionInvestor.com play list reveals IBM hitting new highs near $133. INFY is hitting new highs over $56. The bounce in PCP might be a new bullish entry point. The rally in ZBRA might be a new bullish entry point.