After the Close
The major U.S. indexes put in a mixed to higher performance on this last day of trading before the Christmas holiday break. Stocks began the session slightly in the red, but jumped back to the positive side after the Commerce Department’s report on new home sales came in better than expected. However, the enthusiasm proved to be short lived, and stocks quickly returned to negative territory.
With many market participants getting an early start to the holiday weekend, trading volume has been understandably low, and stocks failed to move with any real conviction. The indexes managed to stage a late afternoon rally, of sorts, and ended the session above breakeven. The NASDAQ turned in the strongest relative performance, having spent most of the session in positive territory. It closed ahead by 15 points, or just over a quarter percent. Meanwhile, the late-quarter Santa Claus rally failed to lift the Dow above the 20,000 milestone, but the index managed to squeeze out a 15-point gain as well for the day. The broader S&P 500 ended up three points.
In terms of sector performance, eight out of the 10 major segments were in the green today, though most by only small margins. The one standout was the healthcare group, which gained a little over three-quarters of a percentage point. The decliners were energy and consumer cyclicals, but even there the losses were minimal.
Elsewhere, oil prices managed to eke out a tiny gain, with West Texas intermediate futures inching just over $53 a barrel. But that was enough to establish a new peak for the year. Also of note, 10-year Treasury yields posted their first weekly decline since the U.S. Presidential election, ending the week at 2.542%.
Wrapping it up with a quick look at the major bourses across the Atlantic, trading action there varied a bit, but volume was also low, and the end result was much the same as on our shores. London’s FTSE and France’s CAC-40 staged late-day rallies to finish the session a few points to the upside, while Germany’s DAX came up a just few points short of breakeven. – Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:10 PM EDT
Wall Street began the final session of the penultimate week of 2016 hoping to make one last attempt to rally up to 20,000 on the Dow Jones Industrial Average. And once again, just as had been the case on Wednesday of this week and again yesterday, it was having trouble doing do, as stocks once more stumbled out of the starting gate. In all, after the first few minutes of trading, the averages were going virtually nowhere, with the aforementioned Dow off a few points, the S&P 500 Index flat, and the NASDAQ up fewer than a handful of points.
Meanwhile little has changed since that unprepossessing start for the market, with equities continuing to mark time. Interestingly, and unlike yesterday when the economic news was largely lackluster, the current session has seen a most compelling report. On point, the Commerce Department reported at 10:00 AM (EDT) that sales of new homes had risen to an annualized rate of 592,000 units. That was above expectations and better than the prior month's tally of 563,000 homes.
Notwithstanding this solid housing report, and favorable metrics on sales of existing homes issued earlier this week and an upward revision in third-quarter GDP from 3.2% to 3.5%, the stock market continues to fail to respond in a big way. This would suggest that some fatigue has started to set in, which is understandable and reasonable given the unrelenting march forward by equities over the past seven weeks. It is not that stocks are weakening to any extent, it is just that the gains are no longer coming routinely.
And today is a prime example of this ho-hum pattern, as stocks are virtually unchanged as we pass the noon hour in New York, with the Dow, the S&P 500, and the NASDAQ trading just below the flat line. It may also be that stocks are pausing to digest the notable move higher. This pattern is similar to what happens when most statistical milestones are approached. Historically, it also happened at Dow 10,000. Likewise of note, trading volume has largely evaporated as the week has progressed.
Still, even with this lethargic showing, the averages are on course, thanks to strength early in the week, to post additional gains for the five-day stretch. In all, as we pass the noon hour in New York, the Dow is now off 12 points; the S&P 500 is virtually unchanged; and the NASDAQ has turned lower, if only by a point. However, the small-cap Russell 2000 is in the plus column after some weakness earlier this week, with a gain of almost five points, while gaining issues continue to hold a moderate lead over declining stocks. So, it is clearly a mixed bag with low volume and limited movement.
Finally, we take this time to wish our readers a happy, healthy, and prosperous holiday season and a welcoming year ahead. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned
Before the Bell
After trying to rally past 20,000 on the Dow Jones Industrial Average over the first three trading sessions of this penultimate week of the old year, the bulls quickly gave up the effort yesterday. To be sure, there was no major selling, with the leading averages once again staying range-bound, as was the case on Wednesday, when stocks had remained in their narrowest band in some two years. This time, like the day before, the action was a little below the neutral line throughout.
The equity market began the session in the red, with sentiment somewhat dampened by a weak data issuance on orders for durable goods, where demand for such long-lived offerings fell 4.6% in November. Also of note, weekly jobless claims increased strongly in the latest week, while personal spending was uninspiring in the most recent month. A solid increase had been expected in this last metric. So, by and large, the reports were not especially supportive, which clearly did not help sentiment.
On the other hand, the highest profile release yesterday was a revised third-quarter GDP release. Earlier estimated at 3.2%, the latest quarterly rate of growth was revised up to 3.5%. Of course, such a strong showing raises the bar for fourth-quarter GDP growth, which we still believe will come in at just around 2%, due to some possible inventory shortfalls. Meanwhile, later this morning, we will be getting a look at sales of new homes in November and consumer sentiment.
In all, the stock market, off modestly in the morning, continued to meander lower during the afternoon, but within a comparatively narrow range, which saw the Dow, for example, remain within a 50-point, or so band. It was a similar story for the somewhat weaker NASDAQ, which held within a 40-point peak-to-trough range. All the other major indexes were lower, as well, in a fairly broad, if still relatively shallow, setback on this next to last trading day of the week.
The market then meandered into the close still pressing lower. As the concluding bell sounded, the Dow, buffeted by some weakness in the consumer cyclical groups, had fallen by 23 points, ending up in the middle of the day's range. The S&P 500 Index and the NASDAQ were off four and 24 points, respectively. Losing issues, meantime, led gaining stocks by a comfortable margin. So, if we make it to Dow 20,000 this week, we will need a strong finish to the session today.
As to the outlook on this last trading day before Christmas, we look off shore for possible early direction and see that stocks were trading generally lower in Asia overnight and are more or less mixed in Europe so far this morning. A flattish open also is indicated for our equity markets ahead of this morning's economic releases. Finally, oil is off a few pennies a barrel; bond yields are down slightly; and commodities are doing little. So, a quiet market session would appear to loom ahead. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
