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US Markets Close Higher Following Ease of Concern in Dubai

U.S. Session Key Developments

•    Commodities Rise as Dollar Weakens
•    Dollar Strengthens into Close
•    Indicators Post Mostly Higher

US equities ended the session near the highs of the day to help stocks close stronger on the month. The Dow rose 6.51% in November while the S&P500 edged up 5.74% along with a nearly five percent rise in the NASDAQ composite. The major focus of trading today included investors remaining rattled over risks with Dubai World’s debt delay plan. While this may have affected sentiment, US financials are less exposed than European counterparts and did not suffer declines similar to European bourses. Risk appetite appears to be returning back to the marketplace as dollar weakness resumed while commodity prices saw further escalation. Meanwhile, event releases played a positive role as Chicago and Milwaukee PMI surveys came in higher than the previous month, along with a rise in the Dallas Feb Manufacturing Activity indicator. Also affecting the mood were results of Thanksgiving ‘Black Friday’ sales, which included higher turnout while consumers spent less than the previous year. The National Federation of Retailers remains committed to its expectation for lower sales in this holiday season, and consumer spending remains a weak point in the economic recovery. Ultimately, the fundamental picture for stocks remains rosy. Lack of action by the Federal Reserve, and a clear unwillingness to change its tone on monetary policy, will continue to play into dollar weakness. Consequently, further upside in asset prices may stimulate a false sense of confidence in consumers and spark resurgence in spending. While this is hardly a perfect solution, this policy seems to be having some effect as the economy grew in the third quarter and is expected to continue to expand into 2010.

DJIA 30                      10,464.40                   +30.69               +0.29%
Trading in the Dow led to a higher close as the Financial sector rallied 2.19% while all other sectors posted little change. Major movers on the day included JPMorgan Chase, Bank of America and American Express higher by more than two percent each. Ultimately the index gained the most of the three majors this month as large firms in the index fare well from dollar weakness.

S&P 500                    1,110.63                   +4.98                 +0.45%
Stocks on the broader S&P500 closed higher by nearly half of one percent as the financial sector rallied 2.7% similar to that of the Dow Jones. US banks have lower exposure to the Dubai problems, and weakness seen in the past week has been viewed as a buying opportunity. Despite this, nearly half of stocks fell today as lingering concerns remain as to the strength of the economic rebound.

NASDAQ                         2,176.05                    +6.87             +0.32%
Trading in the tech-heavy NASDAQ led to a gain of one-third of one percent, while the index remains the most dominant since the start of the year with a gain of 36%. Five of ten sectors gained with financials leading at a move of 1.95% while nearly as many stocks fell for those that rose. Shares of online retailer Amazon rose 3.17% to lead the market higher as ‘Cyber Monday’ sales will boost revenue. Of the ten largest firms, four posted declines with just one firm seeing a move of one percent or more in either direction, a clear sign that caution endures.

Written by Roman Kadinsky, CFDTrading Research
Please send any comments about this report to Rkadinsky@fxcm.com