Fundamentals, US Markets

US Stocks Close With S&P500 and NASDAQ Extending Highs

U.S. Session Key Developments

•    Commodities Rise on Dollar Weakness
•    New Home Sales Fall Sharply
•    Income/Spending Grows

US markets closed up following a volatile session as the Dow managed a minor gain of 0.01% while the NASDAQ and S&P500 extended new highs. News triggering today’s activity included indicators in the US. Income and spending rose in November, just a tick off estimates, while core PCE came in unchanged. Also, new home sales came in with a sharp surprise drop of 11.3% while the finalized reading of U. Michigan consumer confidence came in lower. Ultimately, such weakness did not deter equity buying as the NASDAQ closed higher by nearly one percent. Following the morning indicator releases, along with the DoE weekly inventory readings, commodities traded higher with crude up nearly 3% while gold and silver climbed slightly. Clearly, investors are looking ahead towards acceleration in growth for the fourth quarter and into 2010 with little regard to current data so long as it shows improvement. Today’s dollar weakness comes in contrast to the recent shift noticed across classes, in which an equity rally has been accompanied by increased demand for the greenback. Ultimately, equities have performed strongly this year with gains of more than 43% in the NASDAQ. Performance next year promises to play on two significant trends. Weighing on both sides will be economic growth versus the Federal Reserve’s eventual need to raise rates. This scenario may not be a serious issue in the next two months, but it’s the fear of hiring rates may increase quickly If growth proves rapid.

DJIA 30                      10,466.44                   +1.51               +0.01%
The Dow closed with little change on the session while six of nine sectors climbed along with nearly two-thirds of stocks of trading higher. Alcoa and DuPont climbed the most with gains of more than one percent, while Merck closed lower by 1.32%. Ultimately, light trading volume and the holiday season will lead the index to post a lower range into the year end with less volatility. Unlike its counterparts, the Dow has not set a new 2009 high.

S&P 500                     1,120.59                   +2.57                 +0.23%
The broader S&P500 index climbed nearly a quarter of a percent as nearly all sectors gained with Basic Materials leading up 1.9%, while financials fell 0.37%. Of the ten largest firms, only Google saw a move of more than one percent, up 1.74% as technology climbed. Ultimately the S&P500 appears to be breaking out of its mid-November range, while caution should be noted as end-of-year volatility remains low.

NASDAQ                    2,269.64                    +16.97             +0.75%
The tech-heavy NASDAQ outperformed today, accelerating its year-over-year growth to 44%. Nearly all sectors climbed while telecommunications fell slightly by 0.03%. Technology led to more than half the gain of the index, with Google up 1.74% and Amazon gaining 3.87%. Of the ten largest firms, only one firm closed lower.

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