Published December 28, 2010
FOX Business: The Power to Prosper
Overcoming a pair of dreary economic reports, the Dow drifted slightly higher on Tuesday to land at a new 28-month high, but failed to drag the Nasdaq Composite along for the ride.
The Dow Jones Industrial Average rose 20.51 points, or 0.18%, to 11575.54, the Standard & Poor's 500 gained 0.97 points, or 0.08%, to 1258.51 and the Nasdaq Composite dropped 4.39 points, or 0.16%, to 2662.88. The FOX 50 added 1.48 points, or 0.16%, to 899.31.
The mixed close largely kept the markets’ bullish trend intact and left all three major indexes up more than 5% a piece in December.
Trading volume remained very light as Wall Street continues to dig out of the huge snow storm and traders dribble out the clock on what has been a positive 2010. In fact, Tuesday marked the 17th-straight session that the Dow swung in a range of less than 100 points -- the longest streak since 1996.
“This year has been over for weeks, if not months for most folks. The lines of least resistance continue to be up,” Ted Weisberg, a veteran NYSE trader at Seaport Securities, told FOX Business. “We’re probably just going to continue to drift higher. We’re probably going to close right on the highs of the year.”
The blue chips reached the finish line on Tuesday at their highest level since August 2008. The majority of the Dow's 30 stocks made headway, led by energy titan Chevron (CVX) and tech giant Hewlett-Packard (HPQ). The index's weakest links were Home Depot (HD) and American Express (AXP).
Wall Street also landed in a stalemate after Monday's snow-blanketed session, which saw the New York Stock Exchange's lowest full-day composite volume since the last day of 2009.
After having no major economic or earnings reports to analyze on Monday, traders received a pair of disappointing economic indicators to digest on Tuesday.
Consumer discretionary stocks like Whirlpool (WHR) and Dell (DELL) were among the biggest drags on Wall Street, sinking after the Conference Board said consumer confidence unexpectedly declined in December. The private research group's confidence index slid from a revised 54.3 reading in November to 52.5 this month. Economists had been calling for a rise to 56.0.
Wall Street pays close attention to confidence figures, especially during the crucial month of December, because consumer spending accounts for about two-thirds of U.S. gross domestic product.
At the same time, housing-related stocks such as Pulte (PHM) and Lowe's (LOW) lost ground as the S&P/Case-Shiller 20-city home price index fell 0.8% in October from the year before, the fourth consecutive decline. Economists expected a more modest decline of 0.6% in October. On a month-over-month basis, home prices were down 1.3%, twice as much as Wall Street expected.
Meanwhile, the euro reversed an early rally and turned solidly negative, falling 0.35% to $1.3118. Traders focus on the euro's relationship with the greenback because a stronger dollar hurts commodities and exports.
On the commodities front, crude oil added 49 cents a barrel, or 0.54%, to $91.49. Gold added $22.80 a troy ounce, or 1.65%, to $1,405.20.
General Motors (GM) rallied 2% after a slew of Wall Street brokerages began coverage of the bailed-out auto maker with bullish calls. Analysts at JPMorgan Chase, Credit Suisse, Barclays Capital and Morgan Stanley, Bank of America and Citigroup all reportedly started GM at their highest rating. Morgan Stanley was the most bullish, setting a $50 price tag on GM.
AllState (ALL) is suing Bank of America (BAC), former Countrywide CEO Angelo Mozilo and others over Countrywide’s sale of mortgage securities. AllState said it suffered "significant losses" after buying more than $700 million of Countrywide mortgage-backed securities in reliance on misrepresentations and omissions.
Nasdaq OMX Group (NDAQ) is pondering a return to Japan as early as 2012, according to local reports. Nasdaq would return to Japan by establishing a new market with Osaka Securities Exchange and offering after-hours and small lot trading.
Barnes & Noble (BKS) failed to win dismissal of a lawsuit over the design of its Nook electronic reader, Reuters reported. A U.S. judge said it is premature to conclude the bookseller did not steal trade secrets.
The U.K.'s FTSE 100 was closed but, Germany's DAX inched up 0.02% to 6972.10 and France's CAC 40 slipped 0.09% to 3858.72.
Japan's Nikkei 225 fell 0.61% to 10292.60, Hong Kong's Hang Seng declined 0.93% to 22621.70 and China's Shanghai Composite tumbled 1.74% to 2732.99.