Equity gauges whose performance some chart analysts consider predictive of stock market gains closed at records yesterday, including the Dow Jones Transportation Average, the Russell 2000 Index and the Morgan Stanley Cyclical Index.
About 83% of the stocks in the S&P 500 rose above their average price over the past 50 days yesterday, and a quarter of them reached their highest levels in 52 weeks or more, data compiled by Bloomberg show. Both measures hit their highest since Aug. 1, a day before the benchmark index peaked and started a 4.6% retreat.
Some 136 S&P 500 stocks had their 14-day relative-strength index above 70 yesterday, the most since May 20, Bloomberg data show. RSI measures the degree to which gains and losses outpace each other and some analysts who watch charts to predict market moves consider a reading higher than 70 as indicating the stock has gained too far too fast.
Economic data today showed sales of previously owned U.S. homes unexpectedly rose in August to the highest level in more than six years as buyers rushed to lock in interest rates before they rise further.
The Federal Reserve Bank of Philadelphia’s general economic index rose to 22.3 in September from 9.3 a month earlier. Readings greater than zero signal growth in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware. The median forecast of 57 economists surveyed by Bloomberg called for a reading of 10.3.
Among other reports, the Conference Board’s index of leading economic indicators increased 0.7% in August. Jobless claims in the U.S. rose less than forecast last week as two states began working through a backlog of applications that were caused by computer-system changeovers.
Investors are also watching the political wrangling over the approaching limit on federal spending. Government funding expires Oct. 1 and the Treasury is expected to exhaust its ability to borrow funds in mid-October, when it will hit the statutory debt limit.
House Republicans could vote as soon as today on a spending plan that seeks to avoid a shutdown by giving party members a chance to deny funds for President Barack Obama’s health-care law. The measure is sure to be rejected by the Democratic-led Senate.
The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, dropped 2.4% to 13.27. The equity volatility gauge has tumbled 22% in September after rallying 26% in August, the biggest monthly gain since May 2012.
Utilities and consumer-staple shares had the biggest drops among 10 main groups in the S&P 500, losing more than 0.6%.
ConAgra fell 3.7% to $30.89. Revenue in the first quarter missed analysts’ predictions as consumer foods volume was lower than planned. General Mills Inc. slipped 2.9% to $48.70 after Wells Fargo Securities downgraded the shares to market perform from outperform.