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It’s not even the Fourth of July yet, but the fireworks have already begun. The S&P has done it again, posting its longest streak of quarterly gains since 1998. And, just before noon EDT in New York, it appears that the rally is not yet over . Just 15 minutes ago. at 11:44 am, the S&P Index set a new intraday record of 1,970.43. The Dow and the Russell 2000 are headed in the same direction during this holiday-shortened week in the U.S.
The continuing rise in the indices followed the release of Chinese manufacturing reports that indicated the first expansion in Chinese manufacturing since 2013 and an expanding order book for U.S. manufacturing, according to the Institute for Supply Management. Gaining two percentage points, from 56.9 to 58.9, “The ISM has now been above 50 in 58 of the last 59 months.” According to Dan Greenhaus at BTIG, “This is the second longest such stretch in the postwar period.”
The British pound has risen to its highest mark in nearly six years. The FTSE 100 is up 0.7%. Japan, Spain, Italy and France reported strong manufacturing data, albeit not the record-setting kind. Nonetheless the major manufacturing countries are indicating an expansion that bodes well for the overall economy and global employment rates. China’s manufacturing expanded at its fastest rate for 2014 in June. UK manufacturing turned in one of its best quarterly performances in the last 20 years.
In addition to manufacturing expansion, U.S. retail sales posted their single largest weekly gain in the past three years during the last full week in June.
The Morgan Stanley Capital Index (NYSE:MSCI) also rose to a record high of 46.71 today, reflecting continuing global growth. Although it has taped off somewhat during the morning hours, the Dow is up 134.00 points to 16,960.60, just 17.58 points below its previous high of 16,978.02.
Adding to the mere interest in the bullish numbers is the fact that the Chicago Volatility Index (VIX) has adjusted downward to 11.12, the lowest (and that is a good thing) it has been since February 2007. Today’s 11.12 is also lower than any VIX average monthly closing since 1990, indicating that investors are much less fearful of stock market volatility for the next 30 days. As long as the so-called VIX “fear factor” remains low, it is reasonable to assume that investors, at least in the short term, are going to be bullish in their trading habits.
Nonetheless, in my own humble opinion (and I have a great deal of respect for my own opinion), the slightest hiccup when markets are at or near all-time highs can scare the bejeebees out of all but the most stalwart investors.
As usual, this highs are exhilarating, but the higher you go, the scarier things eventually get. Buckle your seat belts and hang on. We could be in for quite a ride!
