After The Close - Stocks marched modestly higher again in Tuesday’s holiday-shortened session, fueled by positive economic data. At the 1 p.m. (EST) close of trading, the Dow Jones Industrial Average was up 63 points and the NASDAQ was seven points to the good. Market breadth was broadly positive, as well, although more strength was in evidence on the Big Board than the NASDAQ.
The morning started with a better-than-forecast durable-goods report for November that kept up the view that the economy is coming on strong. That has been an important component of the recent leg up in the bull market.
Then about a half-hour into trading came word that new-home sales for November had topped expectations, although they did slip somewhat from the five-year high set in October. But the Commerce Department revised the October figure higher by nearly 7%, so the subsequent monthly decline was less of a concern. Moreover, the November sales rate was almost 17% above the year-earlier figure and the median price of a new home rose appreciably, both monthly and annually. The data suggested that rising mortgage rates have not nearly derailed the housing market recovery.
Of course, long-term interest rates continued their climb with the positive news on the economy. The yield on the 10-year Treasury note rose to just over 2.98% from 2.93% today, and seemed on its way toward soon surpassing the 3.00% mark if the tone of business news remains upbeat. Higher interest rates could still put a lid on the home construction industry at some point in 2014. Refinancing activity has already dried up, with the Mortgage Bankers Association reporting Tuesday afternoon that the average number of mortgage applications for the latest week fell to a 13-year low, as rates rose.
But, for now at least, the positive aspect of the data is being accentuated. The favorable economic news helped the basic materials sector, in particular. Old-line stocks, such as United States Steel (X), Alcoa (AA), and Freeport McMoRan Copper & Gold (FCX) turned in nice percentage gains as a result.
The feeling that the glass is half full, rather than half empty, was perhaps most evident in a sharp rise in Twitter (TWTR) stock, which was the easily most actively traded issue on the New York Stock Exchange. No profits are projected for the social-media company for at least a couple of years, yet the shares have become a must-have on Wall Street.
On Wednesday, the stock market is closed for Christmas Day. We wish all of our readers a happy holiday. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – Wall Street is quiet ahead of today’s holiday-shortened session (U.S. markets close at 1 P.M. EST this Christmas Eve). Still, there are some stocks that will likely experience active trading today. Indeed, shares of Tesla Motors (TSLA) are up nicely ahead of the bell, after the electric vehicle manufacturer’s Model S sedan retained its five star safety rating from the National Highway Traffic Safety Administration. Elsewhere, Johnson & Johnson (JNJ – Free Johnson & Johnson Stock Report) stock is up slightly in the premarket, likely on reports that the medical supplies company is in talks to sell its blood testing unit to private-equity firm The Carlyle Group in a deal that could be worth approximately $4 billion. – 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 Santa Claus rally continues, as Wall Street, fresh off a stellar series of gains in the five days that concluded last Friday, started the holiday shortened week in bullish fashion as well. To wit, stocks began the day higher, underpinned by additional good news on the economy in the form of data showing further gains in consumer spending, and never really looked back, ending the session with appreciable, but not eye-catching, gains that left several of the key indexes in record-high territory.
All told, the Dow Jones Industrial Average climbed to another all-time high of 16,294. The 30-stock composite had, in fact, surged above 16,300 for a time during the afternoon before easing back about 25 points near the close. Still, the Dow managed to add 73 points on the day. Not to be outdone, the Standard and Poor's 500 Index also climbed to a record high, ending just under 1,828. At its best level of the day, that composite had inched up to 1,830. But the big winner was the NASDAQ, which jumped 44 points, or better than 1%, ending at a 52-week high in the process. But that was not nearly a record. That all-time peak had been set during the dot com bubble days of 2000.
As noted, the bullish case for stocks was strengthened by upbeat metrics, notably in the form of a solid gain in consumer spending. That data issuance was made by the Commerce Department about an hour before trading began on our shores. All told, that survey showed a 0.5% gain in November, more than twice the 0.2% increase in personal income last month.
But the real motivation for yesterday's further market rise, we think, was the continued positive response to the Federal Reserve's decision made last week to start a modest tapering of its highly popular quantitative easing program and the lead bank's statement that it will continue to keep short-term interest rates near their historic lows for some time to come. Now that the Fed has taken one bit of uncertainty from the financial markets, Wall Street seems on course to add to its string of increases, as it did yesterday.
Moreover, the economy continues to press forward at a healthy gait. In addition to yesterday's uptick in consumer spending and generally better metrics on employment, manufacturing, industrial activity, factory use, and consumer sentiment, the stock market has already received some good news this morning from the economy.
On point, just moments ago, the Commerce Department issued a report showing that orders for durable goods had surged by 3.5% last month, easily eclipsing expectations for an increase of 2.0%. This volatile series, moreover, swung notably from a drop of 0.7% in October. In fact, the revised October decline was measurably less severe than the originally estimated 1.6% setback for that month.
Looking further into the report, we find that excluding transportation orders, durable goods jumped by a solid 1.2% last month. The transportation component tends to be volatile given the high-ticket nature of this sector, which is dominated by costly jet aircraft. Finally, orders for non-defense capital goods, which are pivotal to the business spending side of the economy, also increased nicely last month, rising by 4.5%. That was dramatically better than the expectation of 0.7%.
As to the day ahead, the markets in Europe were up a bit earlier today, while on these shores, the better-than-expected durable goods report has turned a small indicated loss in the market into expectations for a mixed opening when Wall Street gets down to business in about a half hour from now. As to other data in this abbreviated session, which is scheduled to close at 1PM (EST) this afternoon, we will be getting a look at new home sales some 30 minutes into the trading session.
So, in summing up, it seems as though the bulls have everything going for them as we wind down this simply sensational year for equities. In that setting, with everyone it seems being bullish, there is always the potential that one disappointing development could send in the sellers. But for now, it is hard to fight the tape. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.