The stock market ended last week with plenty of forward momentum, with the S&P 500 Index enjoying its largest three day gains in three years during the spell Wednesday to Friday, and trading has continued on Monday in a similar vein.
By Peter Martin
Tuesday, December 23, 2014
By early afternoon in New York, the Dow Jones was up 108 points or 0.61% at 17,913, while the S&P 500 Index gained 2.7 points or 0.13% to 2073.4, not far from its all-time high of 2079.47. The NASDAQ 100 also advanced, rising 0.23%, as a decline in biotechnology stocks was more than offset by some large advances in the technology sector. Facebook ($FB) and Intel ($INTC) rose well over 2%, while IBM and Google both climbed more than 1%.
Home sales fall
The stock market’s ascent comes despite data showing a decline in existing home sales during November. Last week’s statement from the Fed cited improvements in the labor market, consumer spending and business fixed investment, but housing was an area of concern, the FOMC statement noting that ‘the recovery in the housing sector remains slow’, and today’s report from the National Association of Realtors adds weight to this judgement.
Existing sales hadn’t been too bad in October, hitting a seasonally-adjusted, annualized pace of 5.25 million, but things appear to have nose-dived in November, with the annualized rate plunging 6.1% to 4.93 million, against expectations for 5.20 million. It’s the first time the level has dipped below 5.0 million since May. Lawrence Yun, chief economist at the National Association of Realtors, blames higher home prices for keeping investors away from the market and claims that tight supply is also an issue. ‘Lagging homebuilding activity continues to hamstring overall housing supply and is still too low in relation to this year’s promising job growth,’ said Mr Yun.
Rally blunts haven demand
The strong performance of the stock market over the last few trading sessions has helped to restore risk appetite, reducing the demand for safe haven assets such as gold and the Japanese yen. The yen’s decline has mirrored the stock market’s rise, slumping for a fourth straight day against the US dollar, the longest string since mid-November. By mid-afternoon in New York, USD/JPY was up 0.35% at 119.92. Gold, meanwhile, slid 1.8% to $1174.4 a troy ounce.
The Holiday schedule means we have an abbreviated trading week, squeezing most of the economic releases into tomorrow’s slot. Included in Tuesday’s list of reports, we have the final estimate for third-quarter GDP, November’s durable goods orders, the final December reading for consumer sentiment, along with house price and home sales data.
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