Posted on December - 18 - 2010
Sentiment Evenly Poised Amid Mixed Catalysts
() - The major U.S. index futures are pointing to a lower opening on Friday, with sentiment reflecting a lack of conviction in the economic recovery despite recent incoming data remaining upbeat. The sovereign debt crisis in Europe continues to be an irritant, with Ireland’s downgrade serving to accentuate the worries. That said, the passage of the tax cut bill by the House and positive tech earnings could cushion some of the weakness emanating from the uncertainty.
After opening Thursday’s session higher amid the release of upbeat economic data, stocks lost ground, receding modestly into negative territory in early trading. An encouraging manufacturing report helped allay the negativity and the major averages recovered immediately thereafter and advanced through the rest of the morning. Stocks consolidated in the afternoon to close moderately higher.
The Dow Industrials ended up 41.78 points or 0.36% at 11,499 and the Nasdaq Composite Index gained 20.09 points or 0.77% to close at 2,637, while the S&P 500 Index closed 7.64 points or 0.62% higher at 1,243.
Twenty-five of the thirty Dow components closed higher, with Alcoa (AA) leading the gains with a 3.58% rally. Bank of America (BAC), Cisco Systems (CSCO), Chevron (CVX), General Electric (GE), Hewlett-Packard (HPQ) and Procter & Gamble (PG) also advanced notably. On the other hand, American Express (AXP), which announced a deal to buy German marketing company Loyalty Partner for $660 million, slid 3.36%.
Among the sector indexes, the Dow Jones Transportation Average rose 1.34%, the Dow Jones Utility Average gained close to 1%, the NYSE Arca Biotechnology Index moved up 1.59%, the Philadelphia Housing Sector Index rose 1.26% and the S&P Retail Index added 1.04%. Meanwhile, the NYSE Arca Gold Bugs Index fell 1.66%.
In the technology space, the NYSE Arca Software Index and the NYSE Arca Networking Index advanced 1.10% and 2.15%, respectively.
On the economic front, the jobless claims report showed that the number of individuals claiming first-time unemployment benefits fell to 420,000 in the week ended December 10th from 423,000 in the previous week. The four-week average declined to 423,000 from 428,000, dropping to its lowest level since August 2008. Meanwhile, continuing claims rose by 20,000 and extended benefits increased by a net 325,000.
A Commerce Department report showed that housing starts rose 3.9% month-over-month in November to 555,000 following an 11.1% drop in October. Multi-family starts fell 9.1%, while single-unit starts, accounting for 84% of overall starts, rebounded by 6.9% to a 7-month high. Meanwhile, building permits, an indicator of future housing activity, fell 4% to 530,000, the lowest level since April 2009.
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