The
stock market closed sharply higher with the broad Standard & Poor’s 500
index setting an all-time record Friday, finally punching through the 1900
level after several failures in recent weeks.

Volumes
were low ahead of Monday’s Memorial Day holiday in the U.S. Macroeconomic data
continued to be positive, though mildly so, and stocks continued their hesitant
upward drift.

Next
week is without much in the way of potentially market-moving data. Market
participants point to the June 6 release of May non-farm payroll data and the unemployment
rate as indicators that could provide the next pivot point.

Last
week, the Dow Jones Industrial Average gained 115 points, or 0.7%, to 16,606.27.
The S&P 500 closed up 23 points, to 1900.53, an all-time high, as noted.
The Nasdaq Composite index rose 2.3%, or 95, to 4185.81. The Russell 2000
small-cap index tacked on 2.1% to 1126.19.

A
positive tone Friday was set early by reassuring words from Russian President
Vladimir Putin that his country would respect the results of Ukraine’s
presidential election Sunday, says Kimberly Forrest, a senior equity analyst at
Fort Pitt Capital Group. “We’ll see whether or not he respects that,”
she adds.

Nevertheless,
it had a calming influence on a light-volume day, she says, allowing the
market’s generally upward bias of recent months to reassert itself.

Economic
data continue a two-step-forward, one-step-back dance. Last week initial weekly
jobless claims increased slightly but new-home sales improved. Friday, the
Commerce Department said new U.S. single-family home sales rose to 433,000,
modestly above consensus but better than March.

While
economic news has been generally supportive of higher share prices, the market
remains hesitant and still has a wait-and-see attitude, says Timothy Leach,
chief investment officer at U.S. Bank Wealth Management. Investors are
apprehensive about the effect on the economy of the Federal Reserve ending its
quantitative-easing strategy later this year, he adds. It’s as if the market is
trying to navigate a river of doubt, using each data point as a stone to hop
across, he says.

Despite
the worry, and with bonds still yielding so little, stocks as an asset class
win out, argues Andrew Ahrens, who runs Ahrens Investment Partners. “You
can’t get a return on your investment elsewhere…and by a process of elimination
stocks are the place to be until interest rates go up,” he says.

Separately,
the venerable Dow Theory remains in a bullish trend for stocks, according to
Ned Davis Research. For youngsters, the theory goes that industrials make the
goods and transportation firms ship them, so when there’s confirmation between
the Dow and the Dow Jones Transportation Average, it’s a signal about stock
trends.

Both
the Dow and the DJTA are above their 200-day moving average. The Dow set a new
record in the previous week and the DJTA did this past week.

Source: Barrons Online