Bartlett Market Week
Market Week: December 28, 2009
The Markets
Santa Claus didn't disappoint this year. Investors found in their stockings new year-to-date highs for all four major U.S. stock indexes. The Dow saw its highest point since October 2008, the S&P regained 50% of the drop from its 2007 high before all the trouble started, and the Nasdaq was up 80% from its March low despite (or perhaps partly because of) a shortened trading week and light volume. Pere Noel also made a visit overseas, where the British and French markets reached their highest levels in more than a year before closing for the holidays.
Note: Market indexes listed are unmanaged and are not available for direct investment.
Last Week's Headlines
- November sales of existing homes rose to their highest level since February 2007, according to the National Association of Realtors. The 7.4% increase was likely prompted in part by the November 30 deadline to qualify for the tax credit for first-time home purchases, which has since been extended into next year. It was the third consecutive monthly increase for resales.
- The tax credit deadline also may have affected new-home sales, though in a different way. Sales of new homes fell 11.3% in November from the month before. New-home sales are recorded when a contract is signed rather than at closing, as resales are, and signing a contract in November might not have left buyers enough time before closing to meet the original deadline for the tax credit.
- The final figure for Q3 Gross Domestic Product (GDP) was 2.2% rather than the 3.5% initial estimate. However, that was still the fastest pace in two years. Also, lower inventories contributed to the downward revision, which could prompt future buying pressure.
- Worker compensation saw its biggest monthly increase since April, rising 0.3% in November. However, the increase was largely due to an increase in the number of hours worked, which rose 0.6%. Real disposable incomes, which had been down for nearly two years, are now up 2.3% compared to two years ago, though government benefit payments and tax cuts accounted for much of that. Consumer spending also rose 0.5% in November.
- November durable goods orders (not including defense and commercial aircraft) were up 2.9% in November. However, including those two volatile sectors brought the figure back to 0.2%, and orders overall are still 21.6% below last November.
- The euro benefitted from the Greek parliament's approval of a plan that would cut the nation's budget deficit from 12.7% of the country's GDP to 9%.
Eye on the Week Ahead
As the last week of the last year of the past decade winds to a close, there could be some last-minute window dressing of portfolios during the holiday-shortened week, though volume could be relatively light. U.S. markets will close from 1 p.m. Thursday until January 4.
Key data releases: Home prices, consumer confidence (12/29).
Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
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