Economic Optimism Leads To Continued Strength On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved mostly higher during trading on Monday, extending the strong upward move that was seen last week. The gains lifted the Dow and the S&P 500 to new record highs, while the Nasdaq reached its best levels since 2000.

The major averages all ended the day firmly positive, although the Nasdaq outperformed its counterparts. While the Nasdaq jumped 44.16 points or 1.1 percent to 4,148.90, the Dow rose 73.47 points or 0.5 percent to 16,294.61 and the S&P 500 climbed 9.67 points or 0.5 percent to 1,827.99.

The strength on Wall Street partly reflected continued optimism about the outlook for the U.S. economy following upbeat remarks by the head of the International Monetary Fund.

In an appearance on NBC's "Meet the Press" on Sunday, IMF Managing Director Christine Lagarde said the lender will raise its forecast for U.S. economic growth in 2014 due to recent positive economic data and the recently approved budget deal in Washington.

"Growth is picking up," Lagarde said. "And unemployment is going down. So, all of that gives us a much stronger outlook for 2014."

The IMF previously forecast that the U.S. economy would grow by about 2.6 percent in 2014 compared to its forecast for 1.6 percent growth in 2013.

The Commerce Department also released a report before the start of trading showing that U.S. personal spending increased in line with economist estimates in the month of November.

The report said personal spending rose by 0.5 percent in November following a 0.4 percent increase in the previous month. The continued spending growth came even as personal income crept up by just 0.2 percent in November compared to expectations for an increase of about 0.5 percent.

Amna Asaf, an economists at Capital Economics, said, "November's U.S. personal income and spending data provide more evidence that real consumption growth is on course to grow between 3% and 3.5% annualized in the fourth quarter."

In corporate news, shares of Apple (AAPL) moved sharply higher after the tech giant reached a multi-year deal with China Mobile to sell the iPhone in China.

Sector News

Electronic storage stocks saw substantial strength on the day, resulting in a 3.6 percent jump by the NYSE Arca Disk Drive Index. With the gain, the index reached a two-month closing high.

Quantum (QTM) helped lead the storage sector higher, surging up by 3.3 percent, while EMC Corp. (EMC) and SanDisk (SNDK) also posting notable gains.

Significant strength was also visible among housing stocks, as reflected by the 2.7 percent gain posted by the Philadelphia Housing Sector Index. Strong gains by KB Home (KBH) and PulteGroup (PHM) helped lift the index to its best closing level in nearly seven months.

Biotechnology stocks also turned in a particularly strong performance, driving the NYSE Arca Biotechnology Index up by 2.3 percent to a record closing high.

Steel, tobacco, and telecom stocks also saw some strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Hong Kong's Hang Seng Index advanced by 0.5 percent, while China's Shanghai Composite Index edged up by 0.2 percent. Meanwhile, the Japanese markets were closed for a public holiday.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index jumped by 1.1 percent, the German DAX Index climbed 0.9 percent and the French CAC 40 Index rose by 0.5 percent.

In the bond market, treasuries came under pressure amid the continued optimism about the economic outlook. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 2.929 percent.

Looking Ahead

Reports on durable goods orders and new home sales may attract some attention on Tuesday, although trading activity is likely to be subdued amid an abbreviated session and ahead of the holiday on Wednesday.