Stock Market News for December 29, 2009 - Market News
Better holiday sales and rising commodity prices pushed stocks to their sixth straight gain and new highs for 2009. The market is back to levels not seen since the fall of 2008, around the time of the collapse of Lehman Brothers.
Major indexes edged higher in light trading on Monday after sales figures showed shoppers spent more freely this holiday season, a sign that consumers are feeling better about the economy. Figures from MasterCard Advisors' SpendingPulse, which track all forms of payment, show that retail sales rose 3.6% from Nov. 1 through Dec. 24, after dropping during that time last year. Adjusting for an extra shopping day between Thanksgiving and Christmas, the number was closer to a 1% gain.
Growing recovery optimism has increased risk appetite of investors who anticipate improved corporate results, making current valuation measures more palatable. At the same time, investors are growing increasingly apprehensive over the likelihood of Fed interest rate hikes and additional "mopping up" moves to reduce liquidity and lower inflation risks as the economy improves.
The Dow Jones industrial average rose 26.98, or 0.3%, to 10,547.1, its highest close since Oct. 1, 2008. The Dow transportation average fell 24.37, or 0.6%, to 4,163.5. The Standard & Poor's 500 index rose 1.30, or 0.1%, to 1,127.8, and the Nasdaq composite index advanced 5.39, or 0.2%, to 2,291.1. Market breadth was mixed. On the New York Stock Exchange, losers beat winners by a narrow margin on volume of 710 million shares. On the Nasdaq, decliners topped advancers seven to six on volume of 1.25 billion shares.
Meanwhile, commodity prices rose as the dollar fell, giving a boost to energy and material stocks. Fannie Mae (FNM) and Freddie Mac (FRE) both rallied after the Treasury Department removed its $400 billion cap on the amount of money it will spend to keep the companies afloat. Treasury said it will now increase support depending on how much each company loses per quarter. Fannie Mae surged 21% to $1.27 while Freddie Mac increased 27% to $1.60. But the two stocks were an exception in an otherwise weak banking sector. Financial shares were impacted after Bank of America/Merrill (NYSE:BAC) lowered fourth quarter earnings projections for the major firms, cutting estimates for Goldman (NYSE:GS) to $5.74 from $6.57; Morgan Stanley (NYSE:MS) to 40 cents from 47 cents; JP Morgan (NYSE:JPM) to 68 cents from 71 cents. Citigroup's (NYSE:C) interim expectations were held at a 36 cent loss.
In other sectors, American International Group (AIG) climbed 4.6% to $31.50. IBM moved up as Barron’s said it may gain after focusing on emerging markets. IBM rose 1.3% to $132.31, for the biggest gain on the Dow average. Among airline stocks, Delta (DAL), the owner of Northwest Airlines, decreased 4.1% to $11.29 and AMR, owner of American Airlines, lost 4.8% to $7.75.
With fewer traders in the market due to the holidays, and without any bad news, analysts say stocks are likely to drift higher during the final days of 2009.
In total, the Treasury Department is issuing $118 billion of debt this week. Investors have worried this year that demand for government debt would wane amid the massive amounts of supply. But so far, most auctions have gone smoothly. The yield on the previously auctioned 10-year Treasury note, which moves opposite its price, rose to 3.85% from 3.80% on Thursday.
The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.
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