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Stock Indexes Close High In Range; Trump Stirs Rally

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U.S. stock indexes posted modest gains Monday, but several segments of the market demonstrated strength.

The Nasdaq rose 0.3%, while the S&P 500 and the Dow Jones industrial average both added 0.1%. But the small-cap Russell 2000 popped 0.9%, according to preliminary figures. Volume in the stock market today fell on the NYSE but rose on the Nasdaq, early figures showed.

Small caps weren't alone in rising. Building, oil, steel and select retail groups posted muscular gains. President Trump's comments about rebuilding America's infrastructure appeared to be the catalyst.

Cement and wallboard provider Eagle Materials (EXP) rose 2.5% in above-average volume. The midcap stock bounced off its 50-day line. A breakout from a flat base Jan. 24 advanced 7% and then rolled over. Eagle Materials never triggered the 8% sell rule, but the down days in heavy volume suggested that at least some funds were lightening positions.

Oil equipment maker Dril-Quip (DRQ) shot up 4% in strong volume. Zacks Investment Research upgraded the stock from hold to buy.

Specialty alloys manufacturer Allegheny Technologies (ATI) added 2% in soft trade. The stock is trying to halt a four-week losing streak.

Home furnishings retailer Restoration Hardware (RH) posted a 4% gain in strong volume. The small-cap stock gapped up 24% Friday, a day after quarterly results were announced. A Guggenheim analyst affirmed its buy rating on Restoration Hardware and a price target of 45. The 45 price target represents a 37% gain from Monday's price.

Trump's comments Monday suggested that infrastructure spending and increased military spending were top priorities. Reports of a delay in infrastructure spending appear now to have been wrong. "We're going to start spending on infrastructure big," Trump said Monday. "Not like we have a choice. It's not like, oh gee, let's hold it off."

As IBD's Big Picture noted late Thursday, the report based on anonymous sources "could prove to be wrong" despite the heavy selling on the rumor.

Economic news Monday was mixed.

Durable goods orders for January rose 1.8%, matching the Street's consensus estimate.

Pending home sales in January dropped 2.8% vs. expectations for a 1.1% gain. The drop was blamed on a low supplies. However, the situation — low supply coupled with fairly brisk demand — is driving up prices.

The Street apparently took that as a bullish sign for homebuilders. Meritage Homes (MTH) thrust 3%.  KB Homes (KBH) broke out with a 3% pop, but volume was only 13% above average. Lennar (LEN) also broke out in low volume as the stock gained 2%. Toll Brothers (TOL) padded last week's 7% pop with a 2% gain.  Pulte Group (PHM) broke out in average volume as it rose 2%. D.R. Horton (DHI) poked 2% higher in average volume.

Coming up Tuesday: The second take on fourth-quarter GDP will be released before the opening bell. The Street expects a revision to 2.1%, vs. the first reading of 1.9%. The range of estimates runs from 2% to 3.1%.

Other reports Tuesday will include the Redbook report on same-store sales at department stores, chain stores and discounters; the S&P CoreLogic Case-Shiller home price index; the Chicago Purchasing Managers Index; The Conference Board's consumer sentiment survey; and the Richmond Federal Reserve's manufacturing gauge.