May 15, 2017

Stocks opened sharply higher this morning (Dow +83 pts; SPX +.5%). Both the Nasdaq and SPX are hitting all-time highs. All eleven major market sectors are in the green. Semiconductors, transports and energy stocks are up over 1% in early trading. Europe is poised to close up modestly, and most of Asia was up overnight. The VIX Index is hovering around 10.5 and VIX June futures are still trading around 12. The dollar is weaker today and commodities are mostly higher. WTI crude oil is up 2.8% to trade around $48.20/barrel. Bonds are mostly unchanged today. The 5- and 10-year Treasury yields are trading at 1.86% and  2.34%, respectively. It’s a bit odd to see bonds holding value even though stocks are back up to all-time highs.   

Saudi Arabia and Russia both said they favor extending OPEC’s production limit agreement through the first quarter of 2018. They say this will help bring global oil inventories back down to the long-term average. Russia, by the way, is not an OPEC member but is an important oil producer and has been cooperating with Saudi Arabia. Saudi is really focused on stability of oil prices in front of its planned IPO of Saudi Aramco. 

Cyber security stocks are up today after a global malware attack over the weekend that affected about 200,000 computers in 150 countries. The malware was developed using software tools leaking from the US Government’s National Security Administration. Cyber security firm Palo Alto Networks (PANW) is up 3.6% today, FireEye is up 8%, Fortinet (FTNT) is up 3.5% and Cisco Systems (CSCO) is up 2.6%.  

The National Assn. of Homebuilders Market Index, which measures optimism among construction firms, rose to 70 this month. The index is very close to 12-year highs. (By the way, any reading above 50 is positive.) Despite modestly higher mortgage rates and constantly rising home prices, the housing market continues to improve. Just this year we’re finally seeing demand for single-family homes outpace multi-family homes.  

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