January 1, 2010

Major Indices Traded Relatively Flat

In a holiday-shortened trading week, the December 29 session saw little news reported, as there were no corporate earnings released. The major indices traded relatively flat on light volume as investors took solace in positive economic news regarding consumer confidence and home prices. The Dow managed to post six consecutive days in positive ground before Tuesday’s decline, while the S&P was up for the fifth straight day before falling into the red.

There were only two government data reports on Tuesday, the first being the Standard & Poor's/Case-Shiller home price index, which showed that home prices in October advanced for the fifth consecutive month. The index posted a gain of 0.4% to a seasonally adjusted reading of 145.36. Despite the gain, the index remains more than 7% off its reading from October of last year.

David Blitzer, Chairman of the index committee at Standard & Poor’s, commented on the reading stating, "Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip."

The index also revealed that it stands just 3.4% above its record low in May, but is still nearly 30% from its peak in April 2006.

The second economic report released today was from the Conference Board, which confirmed that Americans were more upbeat about the U.S. economy in December. The Consumer Confidence index increased to 52.9, up from a revised 50.6 in November. The current reading marked the second month in a row of advances.

Economists were looking for a reading of 52. The index also revealed that consumers’ six-month outlook jumped to a reading of 75.6, well ahead of November’s reading of 70.3 and marked the highest level since December 2007. On a down note, the survey’s measurement of consumers’ current sentiment showed a reading of 18.8, down from last month’s reading of 21.2.

The price of oil increased during the December 29 session, following a jump in price on Monday, which pushed the price over $79 a barrel. By the close of trading, the price for a barrel of light, sweet crude for February delivery advanced marginally, gaining $0.10 to settle at $78.87 a barrel.

In additional NYMEX trading, heating oil gained $0.0293 to $2.1028 gallon while gasoline retreated $0.005 to $2.0106 a gallon. Natural gas slipped $0.176 to $5.814 per 1,000 cubic feet.

Inside the Forex markets, the Dollar traded higher against the world’s currencies heading into the New Year, as the 16-nation Euro retreated versus the greenback, buying $1.4345, down from Monday’s price of $1.4384. The British pound also decreased in value against the Dollar, as the Sterling bought $1.5898, down from yesterday’s price of $1.6003.

The Dollar also managed to advance against the Japanese yen, buying 92.00, higher than yesterday’s yen price of 91.59.

Following a $44B auction in 2-year notes on Monday, Tuesday’s bond trading saw a sale of 5-year notes worth $42B that sent the notes to its highest yield point in more than four months. With trading concluded, the 5-year note was up 4/32 at 97 30/32, while its yield was slightly lower at 2.57%, but not before touching its high of 2.63% in early trading.

Meanwhile, the benchmark 10-year note was higher as well, adding 10/32 to 96 16/32, with its yield slipping 0.04% to 3.80%. The longer maturing 30-year note was also up, adding 21/32 to 95 19/32, as its yield retreated by 0.05% to 4.64%. Lastly, the shorter 2-year note slipped following Monday’s auction, falling less than 1/32 to 99 26/32, as its yield gained 0.05% to 1.09%.

By the sound of the closing bell on December 29, the Dow Jones Industrial average retreated by 1.67 points, or 0.02%, to end the day at 10,545.41, while the broader market indicators conclude the session in the red.

The S&P 500 index was down slightly, falling 1.60 point, or 0.1%, to finish at 1,126.19, while the tech-heavy NASDAQ composite index slipped marginally, falling 2.68 points, or 0.1%, to 2,288.40.

2010 Better Trades Article

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BRIAN MULLIN