Fundamentals, Uncategorized

U.S. Stocks Fall From Yearly Highs

U.S. Session Key Developments

•    Oil, Stocks Weaken As GDP Growth Less Than Previously Stated
•    Gold Surges Higher For An Eighth Consecutive Day

U.S. equities fell slightly from the 13-month highs set yesterday after negative revisions to the third quarter GDP and personal consumption figures.  Third quarter economic growth was revised to 2.8 percent from previously estimated 3.5 percent and consumption was weaker-than-expected giving pause to investors over the strength of the economic recovery.  Oil fell in tandem with stocks despite some dollar weakness on expectations that crude-oil supplies rose by 1.5 million barrels in the week ended November 20.  Gold, however, rallied for an eighth consecutive day to close at a spot level of $1168.  Other factors affecting stocks included the release of November’s FOMC Minutes in which policy makers predicted that unemployment could remain in the mid 9 percent range through 2010.  This gloomy forecast may further belief that the current bull rally has surpassed the fundamentals of the U.S. economy and has been speculative in nature thanks to low rates and government stimulus.  Looking towards tomorrow’s session, there are numerous economic indicators to be released including personal income and spending, durable goods orders, and jobless claims.  Being the day before Thanksgiving, light trading volume should be expected in tomorrow’s session which could be a cause for significant volatility.

DJIA 30                      10,433.71                   -17.24               -0.16%
The Dow Jones Industrial Average fell from its 13-month high as a majority of its sectoral components were losers on the day.  Only 11 out of the Dow’s 30 stocks gained on the day, as Verizon and AT&T were the biggest winners up over 1 percent each.  All in all, trading was light in each index as total volume was 23 percent lower than the three-month average.

S&P 500                         1,105.65                   -0.59                 -0.05%
The broader S&P500 index closed slightly lower as financial stocks dropped over 0.7 percent after the FDIC said that the number of problem lenders climbed to a 16-year high.  Investors showed interest in defensive stocks today as telephone and health care stocks were the biggest winners of the index.

NASDAQ                         2,169.18                    -6.83             -0.31%
The tech-heavy Nasdaq posted the biggest loss of the major indices as technology stocks fell over half of 1 percent today.  Dell stock dropped over 3 percent on the day, while Yahoo and Adobe Systems fell over a point each.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com