The holiday-shortened trading session on Tuesday saw the Dow and S&P 500 extending their record runs propelled by encouraging economic numbers. Higher orders for manufactured goods, encouraging new home sales and a report which revealed that corporates were investing at a rapid pace in their businesses acted as gifts on Christmas Eve. Volumes were among the lowest for the year on Tuesday and are expected to remain low through this week. Materials stocks were among the leading gainers.
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The Dow Jones Industrial Average added 0.4% to end at 16,357.55. The Standard & Poor 500 was up 0.3% to 1,833.32. Tech-laden Nasdaq Composite Index closed at 4,155.42, up 0.2%. The fear-gauge CBOE Volatility Index dropped 4.3% to 12.48. In the slowest trading session of the year, around 1.3 billion shares were traded on the New York Stock Exchange. Advancers outpaced the decliners on the NYSE, as for 64% stocks that moved up, 33% ended in the red.
Trading took place till1 pm ahead of the Christmas holiday, but that was enough for benchmarks to sign off with new records. The Dow has now extended its record run into a fifth consecutive session. For the S&P 500, it was the third-straight finish at a record high. The record run has now almost ensured that benchmarks will finish the year with multi-year record highs. The 24.8% gain this year so far places Dow on course for the best yearly performance since 2003. The S&P 500 has so far gained 28.6% and looks set to notch up its best year since 1997. The Nasdaq looks on track for its best finish since 2009 as it has now gained 37.6%.
Helping the benchmarks move north on Tuesday were economic numbers. The U.S. Census Bureau noted that new orders for manufactured durable goods jumped 3.5% in November to $241.6 billion. The jump comfortably outperformed the consensus estimate of a 1.9% gain and also rebounded from a 0.7% decline in October. Moreover, core capital goods order jumped 4.5% in November, the highest since January. This is a key barometer indicating investments by the private-sector businesses. Thus, a report that the American corporates were investing at a fast pace brought a lot of cheer to the markets.
These numbers meant materials stocks lead the day’s gains. The Materials Select Sector SPDR (XLB) gained 1.1% and stocks like E. I. du Pont de Nemours and Company (NYSE:DD), The Dow Chemical Company (NYSE:DOW), Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), Praxair Inc. (NYSE:PX), PPG Industries Inc. (NYSE:PPG) and Air Products & Chemicals Inc. (NYSE:APD) gained 1.7%, 1.2%, 1.6%, 0.8%, 1.1% and 0.2%, respectively.
The joint release by the U.S. Census Bureau and the Department of Housing and Urban Development noted that sales of new single-family houses have dropped 2.1% from the revised October rate of 474,000 to a seasonally adjusted rate of 464,000 in November. Nonetheless, the figure was 16.6% above Nov 2012 figures and also outpaced the consensus estimate of a drop to 440,000. Further, what boosted sentiment was that the government revised last three months’ new home sales figure upwards.
Also, the Federal Housing Finance Agency reported a 0.5% jump in home prices in October from September. Compared on annual basis, home prices were up 8.2%.
Some homebuilding stocks surged, riding on the report and the upward revision in home sales figures. Among the gainers, Lennar Corp. (NYSE:LEN), Beazer Homes USA Inc. (NYSE:BZH), DR Horton Inc. (NYSE:DHI), PulteGroup, Inc. (NYSE:PHM) and Hovnanian Enterprises Inc. (NYSE:HOV) jumped 0.6%, 2.7%, 0.8%, 0.1% and 1.0%, respectively.
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