Sam Collins

Expect Market to Continue Move Up

by Sam Collins   06/02/09

A package of positive economic data encouraged investors to put some of their sidelined cash to work Monday, and that drove the S&P 500 (SPX), NYSE Composite (NYA), and the Nasdaq (NASD) to new highs for the year.

Personal spending for April declined just 0.1%, which was better than expected, and personal income showed a 0.5% increase. The Institute for Supply Management (ISM) Manufacturing Index for May was 42.8, which was in line with estimates.

The markets also most likely gained from purchases by money managers who traditionally make investments on the first trading day of a new month. Positive data from China and Europe helped bring in new money, too.

And even though General Motors (GM), the world's biggest auto maker, filed for bankruptcy, that cloud which has hung over the markets for months has now been removed. As a result, GM will be removed from the Dow Jones Industrial Average (DJI) along with Citigroup (C). They will be replaced by Cisco Systems (CSCO) and The Travelers Companies (TRV).

Yesterday's gain brought the Dow to within just a percentage point of a gain for the year. Both the S&P 500 and the Nasdaq are now ahead for the year.

Nine of the 10 major sectors in the S&P 500 gained yesterday, but buying was centered in industrials and technology. And the CRB Commodity Index reported its best day in two months, up 3.1%.

At the close, the Dow Jones Industrial Average (DJI) gained 221 points to 8,721, the S&P 500 (SPX) was up 24 points, closing at 943, and the Nasdaq (NASD) rose 54 points to 1,829.

Volume on the New York Stock Exchange fell from Friday's frenzy to 1.5 billion shares and advancers led decliners by almost 5-to-1. On the Nasdaq, advancers were ahead by more than 3-to-1 with volume of 852 million shares.

The July crude oil rose $2.27 to $68.58 a barrel as a result of the positive economic data reported early in the day and good economic news from China. The Amex Energy SPDR (XLE) gained $1.90, closing at $53.58.

The July gold contract fell 30 cents to $980 an ounce, and the PHLX Gold/Silver Index (XAU) lost $2.41, closing at $157.75.