The May madness continued on Wall Street yesterday. Sure, it was another all-time high for the Dow Industrials and the S&P 500, but the most interesting news was the "Tuesday trend." Stock prices were up yesterday, making it 19 consecutive Tuesdays the Dow has finished in positive territory.
The May madness continued on Wall Street yesterday. Sure, it was another all-time high for the Dow Industrials and the S&P 500, but the most interesting news was the "Tuesday trend." Stock prices were up yesterday, making it 19 consecutive Tuesdays the Dow has finished in positive territory. That is the longest single-day winning streak since 1968 and more evidence of the scope of the 2013 rally. You know the market is really firing on all cylinders when the bears finally decide to go into hibernation. It has reached a point where doom and gloomers just sound stupid as they come up with lame excuses for the rally and continue to plead for a correction. Hang in there, a correction most surely will come, but stop trying to act like you know more than everyone else.
Ben Bernanke sparked an early rally on Wall Street this morning. The Fed chairman is on Capitol Hill before a joint economic committee of Congress and said he and the board will be carefully watching the labor market for signs of economic recovery and make appropriate interest rate and quantitative easing decisions when necessary. Originally the Dow jumped more than 150 points on the news, but has pulled back some in early trading. The Fed is being extremely cautious as it approaches a time when it will change policy. For instance, William Dudley, the president of the Federal Reserve Bank of New York, when asked yesterday what the next move by the Fed will be, said, "Because the outlook is uncertain, I cannot be sure which way, up or down, the next change will be." If these guys and gals don't have a clue -- or are not willing to show their cards -- it means things are so tenuous it is hard to predict what will happen next.
It reminds me of the common answer provided by Bob Farrell, a former stock market strategist at Merrill Lynch, when asked about what's in store for the stock market. He would always respond, "Stocks will go up or down or stay the same."
The National Association of Realtors is out with its April report showing home sales rose 0.6 percent last month to an annualized rate of 4.97 million units, the highest level of activity since 2009. The median home price nationwide was $192,800, up 11 percent from a year ago. Here in the West, the median price of $263,600 was up 17.5 percent from April 2012. "Buyer traffic is 31 percent stronger than a year ago, but sales are running only about 10 percent higher. It's become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction," said Lawrence Yun, chief economist at NAR.
To that end, Robert Toll, executive chairman at Toll Brothers, a luxury homebuilder, said today, "We believe that as home prices continue to increase, homeowners' balance sheet should continue to improve, as should bank balance sheets. People will feel wealthier, banks will lend more and the economy should continue to improve. We believe this should drive demand and, therefore, home prices are likely to continue to rise." The company released its first-quarter earnings report this morning and the stock is up 6.6 percent to $39. Shares of Toll were at $23 a year ago.
Another stock that is up sharply today is Saks. The retailer's shares are up more than 15 percent on news it is looking for a buyer. The shares are trading at $15.50, way up from $9 a year ago. Saks, of course, operates 42 Saks Fifth Avenue stores across the country. I've always found it interesting they have more outlet stores -- 66 Off Fifth stores, including one in Mission Valley -- than regular retail shops.