The listless trading session on Monday came to an end almost at levels from which the benchmarks started trading. Nonetheless, the Dow’s minute gains helped it to finish at another record high. Also, the benchmarks look comfortably placed to notch record annual performance in many years. There was little activity on the economic front, which perhaps further restricted the benchmarks from making big moves on either side. The only action for the day was the report stating a modest improvement in pending home sales index.
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The Dow Jones Industrial Average added 0.2% to close yesterday’s trading session at 16,504.29. The S&P 500 was down a modest 0.02% to 1,841.07. The Nasdaq hardly moved from levels it began trading at as it shed a meager 2.39 points or 0.06% to close at 4,154.20. The fear-gauge CBOE Volatility Index (VIX) gained 8.8% to finish at 13.56. On the New York Stock Exchange, just 452 million shares changed hands. The decliners edged past the advancers, as for 50% stocks that dropped on the NYSE, 47% ended in the green.
Benchmarks traded in a narrow range yesterday, with hardly any major economic event to guide the benchmarks. The S&P 500 had its tightest trading session since December 2010 and it moved by a modest 3.7 points. The Dow’s movement from high to low was limited to 27.5 points, which was its tightest range since February 2007.
The only action for the day on the domestic front worth noting was the housing data by the National Association of Realtors (NAR). According to the report, the Pending Home Sales Index rose 0.2% in November to 101.7 from downwardly revised 101.5 in October. However, it dropped 1.6% from year-ago figure of 103.3.
NAR chief economist Lawrence Yun said: “We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014…Although the final months of 2013 are finishing on a soft note, the year as a whole will end with the best sales total in seven years”. The data noted contracts but not the closings.
The housing sector ended in the positive with SPDR S&P Homebuilders (ETF) (XHB) up 0.5%. Among the housing stocks, Lennar Corporation (NYSE:LEN), KB Home (NYSE:KBH), D.R. Horton, Inc. (NYSE:DHI), M.D.C. Holdings, Inc.(NYSE:MDC), PulteGroup, Inc. (NYSE:PHM) and Hovnanian Enterprises, Inc. (NYSE:HOV). They gained 0.5%, 0.1%, 1.2%, 1.3%, 0.3% and 0.6%, respectively.
The minute gains by Dow helped it extend its record high. In fact, this was the blue-chip index’s 51st record close this year. Alos, the benchmarks might have missed out on big gains yesterday, but they are comfortable on their way to notch record highs in multiple years. The 29.1% gain so far this year has placed S&P 500 to record its best yearly performance since 1997. The Dow and Nasdaq has soared 25.9% and 37.6%, respectively, year to date.
The benchmarks have often enjoyed record finishes through this year. The latest boost for the benchmarks was the central bank’s decision to taper its $85 billion bond buying program. The central bank announced its decision following the conclusion of the Federal Open Market Committee meeting on Dec 18. The move will reduce bond repurchases by $10 billion, bringing monetary stimulus to $75 billion a month from Jan 2014. At the same time, the Fed also indicated that the key interest rate would continue to remain at a record low for a longer period than what was promised previously.
Last week, the positive momentum was further aided by positive economic numbers. These included improved holiday sales during Nov 1 to Dec 24, a drop in seasonally adjusted initial claims, improvement in new orders for manufactured durable goods as well as increased core capital goods orders. Separately, the government revised last three months’ new home sales figure upward.