U.S. stocks are bouncing with a widespread rally underway. Retail, healthcare and transportation stocks are leading the market higher. An improvement in the latest GDP reading is bullish and investors ignored a slight up tick in unemployment. Currently lawmakers are grilling Federal Reserve chairman Ben Bernanke about his role and the Fed's action during the financial crisis and if there was any impropriety regarding the Bank of America/Merrill Lynch merger.
Asian markets were higher. The Japanese NIKKEI index delivered its best percentage gain in weeks with a 2.1% rally. The Hong Kong Hang Seng kept pace with a 2.1% gain as well. The Chinese Shanghai index closed virtually unchanged with a +0.09% rise. The region may have gotten a boost from news that S. Korea has revised their 2009 economic forecast for -1.5% GDP growth from -2.0%.
European stocks stumbled on Thursday after a euro zone report on industrials orders showed an unexpected decline. Economists were looking for month-to-month changes to be flat and for a year over year change to come in at -32.3%. The industrial orders for April actually fell 35.5% from a year ago and -1.0% from March. The French CAC-40 lost 0.6%. The German DAX index gave up 1.39%. The English FTSE is off 1.2%.
Here at home the Commerce Department revised their reading on the first quarter GDP from -5.7% to -5.5%. While this is a lagging report on the economy it perpetuates the idea that things are getting less bad. Another lagging indicator is unemployment and it rose today. The weekly initial jobless claims rose 15,000 to 627,000 people. The continuing claims climbed by 29,000 to 6.74 million. Economists were expecting initial claims to come in at 600,000 and for continuing claims to fall to 6.7 million. Investors appear to be ignoring this news since it's widely expected that unemployment will continue to rise even as the economy improves.
It's a great time to buy a home but not a very good day to be short shares of Lennar Corp. (LEN). The homebuilder reported earnings this morning. The results were not very good. The company missed expectations by 12 cents. The average home price fell from $274,000 to $251,000. Furthermore LEN's incentives on homes rose from $48,700 to $52,600 per home. It's hard to imagine investors buying LEN on this news. What's driving the stock higher was the number of new orders, which jumped 63%. Cancellations fell form 22% to 15%. This looks like a short squeeze with the stock soaring 15.7% to the $9.00 level. The DJUSHB home construction index is up 4.6%.
It's an odd day when you see both the U.S. dollar moving higher and commodities. Both gold and crude oil are posting gains as the dollar bounces. The USO oil ETF is up 2.4% and the GLD gold ETF is up 0.7%. Copper is also up about 2.3%. Meanwhile bond yields are sliding, which is somewhat surprising. The U.S. Treasury will sell another $27 billion in 7-year notes this afternoon. Today's auction will complete a record $104 billion in bonds sold this week.
Currently the S&P 500 is up 1.8% and racing toward the 920 level. The NASDAQ composite is up 1.7% and breaking out past 1820 and its 10-dma. The Dow Industrials are up 1.8% and edging back above their 50-dma while nearing 8450 and its 200-dma. The small cap Russell 2000 is up 1.9% at 505.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Reviewing the OptionInvestor.com play list I see that ACL is breaking out over resistance at $115.00. The stock has hit our trigger to buy calls at $115.25. APOL is bouncing from the $64.00 level again and currently up 3.5%. BDX is in rally mode with a 3.5% gain and a breakout over resistance near $70.00. The stock has hit our trigger to buy calls this morning. DGX is up 2.7% and confirming its breakout from its trading range. Oil stock MUR is up 2.5% and pushing past its 50-dma and almost past its exponential 200-dma. The widespread rally is obviously not helping our put plays. The strength in the homebuilders is lifting MDC and TOL.