After The Close - Stocks today continued to ride the wave of momentum they have enjoyed for most of the past year. At the session’s close, the Dow Jones Industrial Average was 73 points higher and the NASDAQ was in the plus column by 44 points, or materially better than the Dow on a percentage basis. Market breadth was broadly positive, as well, with gainers handily topping losers on both the New York Stock Exchange and the NASDAQ.

Investors got in the spirit when this morning’s business data proved generally supportive of the theme that the economy was in the midst of a broad upturn. Word over the weekend that Apple (AAPL) had come to terms with China Mobile (CHL) to market its groundbreaking iPhones to China Mobile’s 700 million customers added some holiday cheer. In fact, the positive sentiment created by the Apple deal make technology the leading sector among the stock market’s ten major segments.

Wall Street also still seemed to be enthused over last week’s favorable outcome at the Federal Reserve’s policy meeting. Moreover, the long-awaited transition to a more rapid pace of growth, evidenced by Friday’s strong GDP number, confirmed the Fed’s stance that it no longer needed to provide quite as much stimulus to the economy.

Of course, the downside to the prospect of more rapid GDP expansion is higher interest rates, which resumed their climb today, with the yield on the 10-year Treasury note rising from 2.89% to 2.93%.

We note the backup in interest rates this year has led to a shift out of bond funds, given that prices move in the opposite direction of yields. Investors reallocating their holdings toward stocks accounts for a portion of the rally in the equity markets. The only potential trouble with the extra cash coming into stocks is that it has helped to push valuations toward the upper end of their normal range. That increases the chances of a pullback or correction, most likely if the economic data don’t live up to expectations for a time.

Tomorrow, the stock market closes early, at 1:00 p.m. EST, ahead of Wednesday’s Christmas holiday. Economic data on tap for Tuesday include Durable-goods orders for November, which is expected to show a solid rise, and new-home sales for November, where a flat to slightly lower performance is anticipated. There have been indications that modestly higher mortgage rates are clipping home sales at the margin. -Robert Mitkowski

At the time of this writing, the author did not have positions in any of the companies mentioned.


12:15 PM EST - The Santa Claus rally is continuing today on Wall Street, as the major equity indexes were higher at the get-go of trading and have yet to look back. Thus, as we reach the midday hour on the East Coast, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index are nicely higher, with both the index of 30 bellwether companies and the broader S&P 500 Index once again hitting new record highs. Overall, advancing issues are leading decliners by a sizable margin on both the New York Stock Exchange and the NASDAQ, to the tune of more than three to one on the Big Board.

For the most part, the buying is rather broad based, with nearly all of the 10 major sectors in positive territory. The only nonconformist is the consumer staples group, which is still only sporting a minor loss. Leading the pack higher once again are those sectors most closely tied the economy, including the energy stocks. There also is some notable leadership coming from the technology stocks. Shares of industry giant Apple (AAPL) are pulling that group higher. The tech behemoth is up sharply after the company signed a long-rumored multi-year iPhone distribution deal with China Mobile (CHL).

Today’s news on the economy did not bring many surprises. Before the market open, we learned from the Commerce Department that personal income and spending both rose in November—though incomes, while up from the October decline, fell a bit short of the expected 0.4% advance. Personal expenditures (at +0.5%) matched expectations. Then a half-hour into the trading day, we learned from the University of Michigan that consumer sentiment for the month of December—the final revision to the index—was unchanged. Neither report did little to contradict the prevailing sentiment on the Street that the economy is on firmer footing these days, a perspective that seems to have given a nice boost to equities in recent weeks.

There was some news of note from the corporate world today. In addition to the aforementioned Apple deal with China Mobile, we also learned that Jos. A. Bank (JOSB) rejected a takeover offer of $55 per share from the Men’s Wearhouse (MENS), which came just weeks after the former tried to buy the latter. Shares of both apparel retailers are down modestly on the news.

Looking ahead to the second half of the trading day, we don’t see much in the way of notable news that will derail the bulls. In fact, there is not much news this week on the business beat that would be consider to be of the game-changing variety. As such, we would not be surprised if the ongoing move higher, which was on some heavy volume late last week, continues over the next few trading days. All in all, the stockings of those investors’ long equities have been filled with many nice gains the last few trading sessions. Stay tuned. - William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Stocks to Watch from The SurveyCorporate news is rather light at the start of this holiday-shortened trading week. However, there is some news to be aware of. Notably, computer and personal electronics giant Apple (AAPL) has inked a deal with China Mobile, in which the world’s largest mobile phone carrier will begin to offer Apple’s iPhone on January 17, 2014. AAPL stock is up moderately in the premarket on the announcement. Elsewhere, the saga between menswear retailers Joseph A. Bank (JOSB) and The Men’s Wearhouse (MW) continues, with the latest development being Joseph A. Bank’s rejection of a $55-a-share takeover offer from The Men’s Wearhouse made on November 26th. Back in October, Joseph A. Bank tried unsuccessfully to acquire The Men’s Wearhouse. Both stocks are down slightly ahead of the bell this morning. Finally, the stock of Tiffany & Co. (TIF) is indicating a modestly lower opening, after the jeweler announced that it will have to pay roughly $450 million in damages to watchmaker Swatch, stemming from a failed venture between the two companies. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Before The Bell - The highlight of last week’s flurry of buying activity was a nearly 300-basis-point increase in the Dow Jones Industrial Average following the Fed’s latest monetary policy announcement. In all, the major market averages finished the week notably higher, as the Dow Jones Industrials at one point on Friday reached another all-time milestone, the S&P 500 Index rose further past the 1,800 mark, and the tech-heavy NASDAQ set a new 52-week high.

Thus, with only six more trading days remaining in the year, the major U.S. equity indexes are set to close out a very successful 12-month campaign. The new week starts with the Dow 30, the NASDAQ, the broader S&P 500 Index, and the Russell 2000 holding respective year-to-date gains of 23.8%, 35.9%, 27.5%, and 35.0%. The gain in the small-cap Russell 2000 is noteworthy as it shows that investors have had an appetite for risk through the year, helped, in large part, by the continued accommodative policies of the central bank, which continues to flush the markets with cash and is keeping interest rates at historical lows. It has made equities the most attractive option for investors.

In addition to the Fed’s recent decision to only slightly reduce its monthly asset purchases, stocks have gotten a boost of late from several positive reports on the U.S. economy, including better-than-expected data on the labor market earlier this month. Then on Friday, investors were encouraged to learn that third-quarter GDP growth was revised upward, to a rate of 4.1%, surpassing the consensus expectation of 3.6%. The GDP report reassured investors that the economy is on firm footing and continuing to strengthen. Not surprisingly, some of the sectors closely tied to the performance of the economy showed leadership during Friday’s trading session.

Adding all the aforementioned factors up, the new week begins with the bulls looking to continue the Santa Claus rally that now seems to be very much in place. The holiday-interrupted trading week will bring some more data on the economy. Just minutes ago, the Commerce Department reported its latest reading on personal income and spending. That report showed that personal income rose 0.2% in November, while personal expenditures jumped 0.5%. The latter figure may be an indication that consumers are spending a bit more this year on gifts during the all-important and near-concluded holiday shopping season. We will learn more on the psyche of the consumer at 10:00 A.M. (EST) when the University of Michigan’s latest reading on consumer sentiment is released. Tomorrow, we will get reports on new home sales and durable goods orders.

Elsewhere, trading is off to a good start overseas. Asia’s major indexes finished modestly higher overnight, while the major European bourses enter the second half of trading on the Continent sporting nice gains. Investors, though, should note that the moves higher have been on light volume. Such a scenario might unfold on these shores as well with many traders getting an early start on the Christmas holiday. Light volume can lead to more volatility in the market. We should be to learn shortly if that will be the case this week on Wall Street. That said…

With less than an hour to go before the commencement of trading on these shores, the equity futures are presaging a higher opening for the U.S. market. It seems that with the Fed worries now in the past and the economic data continuing to be supportive, investors are still looking to add to their positions in a market that is overbought right now. Stay tuned.   - William G. Ferguson

At the time of this article's writing, the author did not have positions in any of the companies mentioned.