STOCKS RALLY, S&P 500 CLOSES AT RECORD HIGH: Here's What You Need To Know

First, the scoreboard:

• Dow: 16,607.68 (+64.6, +0.4%)
• S&P 500: 1,900.70 (+8.2, 0.4%)
• Nasdaq: 4,185.78, (+31.4, +0.8%)

And now the top stories:

• New home sales were up 6.4% to an annualized pace of 433,000 units in April. We also got a significant upward revision to March's data that showed existing home sales were down a more modest 6.9% March to 407,000 units. "The recovery in housing is back on track, wrote Chris Rupkey at Bank of Tokyo-Mitsubishi UFJ. "One of the most interest-sensitive areas of the economy where Fed policy decisions actually matter is showing steady improvement in the wake of the financial crisis and recession."
• Not everyone was as enthusiastic. "Before the winter, sales were trending at about 450K, so the April reading still leaves activity looking a bit soft," wrote Ian Shepherdson at Pantheon Macroeconomics. "With the NAHB homebuilder survey still very weak, though, we cannot be confident that May will complete the reversal of the winter hit."
• FT economics editor Chris Giles has said Thomas Piketty's best-seller Capitalism in the 21st Century has a series of errors. "Some issues concern sourcing and definitional problems," Giles writes. "Some numbers appear simply to be constructed out of thin air." Piketty's findings had of course renewed interest in growing income inequality.
• The S&P 500 closed above 1900 for the first time ever.
• Stocks which are already at record highs will likely go higher for another month or so before "sharply" correcting, according to Michael Hartnett, Bank of America Merrill Lynch's chief investment strategist. "When the end of zero rates is threatened, likely this autumn as unemployment rates drop to uncomfortably low levels, both credit & stock markets should correct sharply," he writes.
• Markets will be closed on Monday for the Memorial Day holiday. We get more housing data and GDP next week.