Record Run: Major Indices On A Roll As Earnings, Housing Market Looking Solid

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Today’s housing starts number was out of the ballpark and might reflect a strong job market and low mortgage rates

December housing starts data surprise to the upsideSure, there was a slight hiccup a couple days ago, but since then things have gone pretty much straight up. Stocks seem ready to continue that today, with gains in pre-market trading. Momentum means a lot right now, and indices are rolling up new record highs almost every day.

About 7% of S&P 500 companies have reported Q4 results so far, with 74% posting better than expected earnings per share, FactSet said. Oil services company Schlumberger was the latest to beat analysts’ expectations with its top- and bottom-line results this morning, and shares rose nearly 3%, a rare sign of strength in the struggling Energy sector.

Next week the earnings schedule picks up again after Monday’s holiday, but economic data-wise it might feel like an extended holiday break. The only major number is existing home sales Wednesday. It turned out it was too early to write the obituary for semiconductors, as the PHLX Semiconductor index shot up nearly 2% amid new strength in usual suspects like Nvidia , Advanced Micro Devices , and Intel . Some of those high-fliers had started to show signs of fatigue back on Wednesday, but they revived quickly. Maybe that’s a sign that buying interest could appear on declines as some investors still see the sector leading things higher.

It’s hard to ever say one stock set the tone, but MS might have done that Thursday. It’s not often when you see one of the big institutional banks go up nearly 7% and just hang out there all day, but that’s the way things went. The company enjoyed a surge in Q4 fixed income trading, and analysts just hadn’t predicted this kind of performance. Generally, bank earnings looked very impressive with the exception of Wells Fargo and a bottom-line miss from Goldman Sachs .

One sign of broader market strength is that both the Russell 2000 small-cap index and the Dow Jones Transportation Average outpaced the broader SPX yesterday. These two indices had been laggards, but any improvement in their fortunes might bode well for the market because small-caps and transports are often seen as canaries in the coal mine.

 

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