Is there anybody out there who hasn’t yet learned not to fight the tape?
The rally in stocks kept on keeping on Monday, setting new two-year highs — an almost daily occurrence since the market has plowed higher after a significant selloff on Jan. 28.
The Dow Jones Industrial Average added 69 points to finish at 12,161, the Nasdaq rose 15 points to 2784 and the S&P 500 gained 8 points to 1319.
As with much of the move higher in stocks recently, the only consistent catalysts seem to be continuing momentum and the willingness of investors to take on even more risk in the absence of being hit over the head with news to negative to ignore.
Last Friday’s jobs report didn’t offer that — with the surface appearance of a slowly improving labor market buttressed by a decline in the unemployment rate and a strong addition of manufacturing jobs.
A key part of Monday’s push higher was the help provided by financials, which hadn’t really been a part of the market’s winning week last week. The Financial Select Sector SPDR (NYSE:XLF) exchange-traded fund gained 1.5% to $16.85, breaking out of a trading range in which it had existed for most of the year.
The ETF’s top holding, JPMorgan Chase (NYSE:JPM), was up 2% to $45.50. Bank of America (NYSE:BAC) shares added 2.7%.
Strength also was seen in some continued bounceback moves in airlines and the automobile sectors, which had taken some hits in recent weeks. Shares of U.S. Air (NYSE:LCC) and AMR Corp. (NYSE:AMR), the parent of American Airlines, were both up about 5%.
Small-caps outperformed the large-stock indices, disguising somewhat the true magnitude of Monday’s move higher.
On the other side of the ledger, food retailers and restaurants saw their stocks take a hit, as buzz continues to build regarding global food inflation and its increasing hit on profit, assuming, of course, that input costs will eventually have to be passed along to the consumer. Sysco (NYSE:SYY) was off more than 6%.
Commodities finished mixed, with rising industrials offsetting the decline in energy. Oil fell nearly 2% to close at $87.48 a barrel.
Interestingly, the selloff in bonds took a breather, with the yield on the 10-year inching up only slightly to 3.65%. With yields recently moving higher in lockstep with stocks, it remains to be seen if the stabilization in bonds portends the same in stocks.
