Year-end stock trading winding down to a crawl | Wright Investors …

Year-end stock trading winding down to a crawl | Wright Investors …

U.S. stocks spun their wheels for the most part Friday, with the Dow, S&P 500 and NASDAQ registering small losses in a day of quiet trading and limited volatility. The Dow lost one point (or just 1 basis point) for the day, bringing its gain for the week to 1.6%, roughly half the prior week’s gain. The S&P 500 lost 3 bps Friday and had a 1.3% price rise for the week, matching NASDAQ’s 1.3% gain this past week, which was trimmed by Friday’s 0.3% price slide.

For the S&P 500 index, the gap between the Friday’s high (1844.89) and low (1839.81) trades was just 0.28%, the narrowest trading range for any day in more than seven years. Barring unusual trading on the final two days of the year, 2013 will go into the record books as the best calendar year for stocks since 1997, with the S&P 500 total return in excess of 29% – just below the upper quintile of stock market returns since 1926. For the record, the median market return in the year prior to the top quintile years was 9% (vs 16% in 2012); the median return in the year after these 18 top quintile years was 10% (which most investors would find to be an acceptable return on their stocks in 2014).

Foreign stock markets were mostly higher Friday, as European bourses had price gains in the 1% range and Asia averaged gains of roughly 0.3%-0.4%. Tokyo was a bit of an oddity, with the Nikkei 225 virtually unchanged on the day, while the broader Topix index rose 0.8%. For the week, the major European markets had returns clustered around 2%, as did Tokyo and Hong Kong. Shanghai was once again a laggard this past week, largely on Thursday’s 1.6% retreat, which it was not quite able to recoup on Friday (+1.4%).

Bond prices also traded in a relatively narrow range Friday, with the 10-year Treasury bond price falling 3/32nds as its yield climbed to a 2012-13 high of 3.01%. The 30-year T-bond also climbed to a two-year high yield (3.94%), losing 6/32nds in price in the process. The lower quality bond cohort was the only sector in the black for the week. The Barclays Aggregate lost 0.4% for the week, bringing its YTD loss to 2.1%. The 10-year German bund yield shot up 6 basis points to 1.95% Friday, a three-month high.

Friday was an uneventful day on the economic front as well. There were no important government or trade group releases today and, other than pending home sales and the S&P/Case-Shiller home price report, there is nothing of great import out in the coming week either. Commodities prices rallied Friday and for the week just ended, with copper gaining 3.6% and crude oil, gasoline and heating oil each up more than 1%. The dollar gained another 1% against the yen this past week, and the euro rose 0.5% versus the dollar. The dollar’s yen value of 105.17 was the highest since the throes of the Lehman crisis, more than five years ago.

Reports/dates/facts/links to watch for over the next week:

  1. December 30: National Association of Realtors pending home sales index for November; Dallas Fed manufacturing survey for December.
  2. December 31: S&P/Case-Shiller home price index for October; Institute for Supply Management – Chicago index for December; Conference Board consumer confidence index for December.
  3. January 1: Global markets closed for New Year’s Day.
  4. January 2: Weekly unemployment claims; ISM manufacturing composite index for December; construction spending for November.

Copyright © 2013 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.

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Senior Vice President – Investment Research/Economist

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Year-end stock trading winding down to a crawl | Wright Investors …

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