Major Indexes Close In On 2012 Highs

Courtesy of John Nyaradi.

U.S. stock indexes powered closer to 2012 highs on strength in the tech sector, hopes for more central bank support and stabilization in Europe.

For the day, the Dow Jones Industrial Average (NYSEARCA:DIA) gained 85 points, 0.65%, the S&P 500 (NYSEARCA:SPY) added 0.71%, the Nasdaq 100 (NYSEARCA:QQQ) jumped 1.2% and the Russell 2000 (NYSEARCA:IWM) climbed 1.1%.

Facebook crumbled to new lows but activity in Cisco and the balance of the tech sector led to a green close for the Nasdaq (NYSEARCA:QQQ)

Today’s closing prices bring the Dow Jones Industrial Average (NYSEARCA:DIA) to within 29 points of its May 1st closing high and the S&P 500 now stands just 4 points from its April 2nd closing high.

Today’s action came on mixed economic reports as weekly jobless claims rose, new housing starts surprised to the upside and the Philadelphia Fed index declined but not as steeply as in the previous month.

In Europe, indexes gained as German Chancellor Merkel returned from vacation to reiterate her commitment to save the Euro. Germany’s DAX responded with a 0.7% gain and iShares MSCI Germany Index (NYSEARCA:EWG) climbed 1.4% in the U.S. trading day.

All of today’s action came on low summer volumes and low volatility as the major indexes have yet to break through significant resistance at current levels.

Much of current action revolves around the “will they or won’t they” questions surrounding next moves by Dr. Bernanke and the Federal Reserve.  With mixed economic messages, market participants are engaged in a heated battle over whether a new round of quantitative easing will appear at the Federal Jackson Hole meeting in late August and the next FOMC meeting in mid-September.  Last week two Federal Reserve Presidents came out in favor of ongoing easing by the Fed while this week, Kansas City Federal Reserve President Esther Fisher argued that further Fed easing wouldn’t help the economic situation and Philadelphia Fed President Charles Plosser expressed doubts about further quantitative easing.

So the only certainty is that this heated debate will continue as economic data roll in and the next Fed meeting approaches.   Much, of course, will depend upon the monthly unemployment report due September 7th and more evidence like today’s Philadelphia Fed report showing that the economy continues to slow more than expected.

So the S&P 500 (NYSEARCA:SPY) continues grinding higher and challenging yearly highs even in the face of ongoing uncertainty in Europe and economic headwinds at home.

Bottom line:  Global indexes continue grinding higher on the strength of mixed economic reports and hope and faith in global central bankers.  Significant resistance lies just ahead and if these levels can be breached, we can expect fresh new highs for 2012.

Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.