A reversal in crude prices helped stocks end the holiday-shortened, low-volume week 2 ½% higher than where they were a week ago. Oil gained about ten percent to close at $38.10/bbl. For the year, the S&P 500 remains flat and the Dow, weighed down by energy and commodity-related stocks, is lower by 1.5%. The week was wrought with short-covering on some unexpected increases in the energy and materials sectors; year-end tax selling in the worst performing stocks for the year; and bargain hunting for some of the beaten down stocks that investors believe have longer-term value at current levels. This aimless activity will probably continue into the coming week with the outcome still uncertain for a year-end rally. On balance, every market sector saw green arrows with oil & gas and basic material stocks up 4.7% on average. The weaker consumer staples and utility industries even managed to gain around 2%. Gross domestic product grew at a 2% annual rate in the third quarter, helped by a 3% rise in consumer spending thanks to lower gasoline prices. Home sales slid by 10%, hurt by delays caused by new mortgage rules and shrinking supply of homes on the market. In the week ending December 19, seasonally adjusted jobless claims came in at 267,000, a decrease from the previous week’s upward revised level of 272,000. Looking ahead, the uncertain global outlook, the frail prospects stateside, the cautious approach by the Federal Reserve and the high, but not overly excessive, share price valuations in place, selective opportunities remain in the stock market in the year ahead. Global headwinds still exist, however, and oil prices will remain a wild-card.
Enjoy the rest of the holiday week and I personally wish all of my readers a safe, healthy and prosperous New Year.
Here is the answer to last week’s trivia question: Which aircraft company, that hasn’t’ developed a strike aircraft since the last B-2 in 1997, recently won a lucrative contract to build the Air Force’s next generation bomber? Lockheed-Martin, Boeing, Northrop-Grumman or General Dynamics. Answer: Northrop-Grumman.
Today’s Trivia Question: Which of the following is the most valuable sports-related brand? ESPN, Under Armor, Callaway Golf or Nike?