Another round of positive economic data out this morning helped fuel a widespread global rally. Enthusiasm for an end to the worst recession since the 1930s was led by the banking stocks. Another drop in the U.S. dollar pushed commodity and oil-related stocks higher. Crude oil is up over $1.00 and approaching $72 a barrel. Gold futures were up more than $13 and nearing $1,020 an ounce. Even healthcare stocks were higher after the Senate finance committee released their $856 billion healthcare reform bill. Meanwhile improvement in the homebuilder confidence index is contributing to the market's bullish tone.
News was relatively quiet for foreign markets. The Chinese Shanghai index was one of the few major indices not closing higher. The Shanghai lost 1.1% and closed back under the 3,000 mark. The Hong Kong Hang Seng soared 2.5% and closed at a new one-year high. The Japanese NIKKEI gained 0.5%. In Europe investors ignored data showing England's unemployment hit new 13-year highs. Britain's FTSE rose 1.6%. The French CAC-40 gained 1.6%. The German DAX climbed 1.2%.
Here at home the Labor Department released the Consumer Price Index or CPI report. Economists were expecting the CPI, a measure of inflation, to rise 0.3% in August. The CPI came in a little higher at +0.4% yet the core CPI, which excludes food and energy prices, only rose 0.1%, which was inline with expectations. The CPI has risen 1.4% in the last twelve months, which is one of the slowest gains in several years. The rise would have been even smaller except gasoline shot up over 9% in August.
The government also released the August industrial production numbers, which came in at +0.8%. Economists were expecting a +0.6% rise. The Federal Reserve revised July's gain from +0.5% to +1.0%. Industrial production measures output from our nation's factories, mines, and utilities. Car makers lead the way with a 5.5% jump last month thanks to the "cash for clunkers" program. Excluding autos industrial production still rose 0.4%.
Crude oil is getting a boost from both the falling U.S. dollar and news that inventories came in worse than expected. Every week the Energy Information Administration (EIA) releases their oil inventory numbers. Analysts were expecting a drop of three million barrels. The EIA said stockpiles fell 4.7 million barrels. Crude futures are nearing $72 a barrel and the USO oil ETF is up 1.7% extending its bounce to two days in a row. Meanwhile natural gas continues its two-week bounce off of multi-year lows with another 3% rally in spite of a record-breaking glut of natural gas available.
The market's best performers today are the banks. The BKX banking index is hitting new highs for 2009. The IYF and XLF financial ETFs are following suit each hitting new highs for the year. Oil stocks, homebuilders, and mining stocks are all performing very well. Railroads and gambling stocks are the only sector indices in the red. Railroads have been under performing their peers in the transports and gambling stocks have been screaming higher and were due for some profit taking.
Currently the S&P 500 index is up almost 15 points at 1,067. The NASDAQ composite is up about 27.50 at 2,130. The Dow Industrials are up 106 points at 9,789. The small cap Russell 2000 index is up over 10 points at 615.
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:
Glancing over the OptionInvestor.com play list for movers today I see that AAPL is breaking out over resistance at the $180 level. Our second and final target was $179.00. ATI is up 4.5% and pushing past the $35.00 mark. Oil services stock DO is breaking out to new highs over $95.00. FDS has hit our target at $62.00. GS has hit our target at $179.00. GWW is finally breaking out over resistance at $90.00. MTD is up 1.7% and nearing our target. Readers may want to start taking profits now. NEU has hit our second and final target at $92.50. PPG has hit our target at $59.80. RIMM is a strangle play and the $80 calls are trading near $4.65. Readers may want to take profits right now! SLB is also a strangle play and the September $60 calls are trading around $2.20. I suggest readers take profits now!