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The economic news roller-coaster was on the upside today as government reports showed worker productivity climbed at a 1.7% annual rate last quarter. Meanwhile labor costs were up only 0.6%. That's good news for employers, who appear to be getting more work from their people without commensurate increases in pay. In the aggregate, this translates into higher corporate profits and is an indication that the surprisingly strong 1Q earnings were not mere coincidence. Stocks rose accordingly.

The Dow closed today with its third straight record. The S&P 500 crossed above 1500 for the first time since September 2000 and is less than 2% below an all-time closing high. Typically this sort of long-term resistance takes time to penetrate, but short-term momentum is so strong that we won't be surprised to see a quick breakthrough. Heavy trading volume and positive breadth are also bullish signs.

The technology sector appears to be taking its turn in the rapid rotation of sector leadership. Signs of economic growth suggest that companies will step up their buying of new hardware and software. The impending release of the iPhone from Apple (AAPL) may be behind much of the excitement in semiconductors. Reports from chipmakers who build components for the iPhone indicate that Apple intends to produce something in the neighborhood of 50 million iPhones this year. Will one out of six Americans really pay $500 for the latest gadget? Maybe not, but the manufacturers will make money either way.