Stocks were bouncing higher around the globe on Wednesday. The small parade of economic data out this morning was generally positive. Stronger than expected consumer spending, consumer sentiment, new home sales, and a drop in initial jobless claims all contributed to the bullish tone on Wall Street. A new relative low in the dollar is boosting commodities. Gold futures have hit a new all-time high near $1,190 an ounce.
Asian markets were recovering from yesterday's sell-off. The Japanese NIKKEI dipped to new four-month lows but managed an oversold bounce from technical support at its 200-dma. The NIKKEI ended the session up 0.4%. The Hong Kong Hang Seng rose 0.8% erasing half of yesterday's losses. The Chinese Shanghai index rose 2.0% and recovered a good portion of yesterday's painful 3.4% decline. Trading was kind of rocky in Europe as well. European markets dipped into negative territory as investors sifted through the rush of U.S. economic data. News that initial jobless claims came in better than expected helped stocks recover by the closing bell.
England released their revised third-quarter GDP data with an improvement from -0.4% to -0.3%. The English FTSE rose 0.77%. The French CAC-40 rose 0.65%. The German DAX rose 0.58%.
Here in the states the Labor Department said seasonally adjusted initial jobless claims fell from 501,000 to 466,000. The unemployment numbers remain a drag on consumer psychology but the Reuters/University of Michigan survey of consumers (sentiment) saw an improvement from early November. The final reading for November came in at 67.4 compared to their preliminary reading of 66.0. October's final read on consumer sentiment was 70.6. Meanwhile the Commerce Department announced that October consumer spending rose 0.7% following the 0.6% drop in September. The move was fueled by a 0.2% rise in incomes. Economists were only expecting a 0.1% rise in incomes and a 0.5% rise in spending.
Potentially contributing to consumer sentiment and spending has been a drop in mortgage rates. Freddie Mac said that 30-year fixed mortgages rates fell to 4.78% this week. This matched the record lows from April 2009. A year ago rates were 5.97%. Plunging mortgage rates are certainly beneficial to the struggling housing sector. The Commerce Department said that October new home sales surged 6.2% from an upwardly revised 405,000 pace in September to a seasonally adjusted rate of 430,000 in October. Investors should take this data with a grain of salt. Most of this "gain" was fueled by a huge surge in the south. New home sales in the Northeast and the West fell 5% while new home sales plunged 20% in the Midwest. These declines were overshadowed by a 23% jump in the South, which happens to be the largest region. The DJUSHB home construction index is up 0.7% and the HGX housing sector index is up 0.4% on the session.
Currently the S&P 500 is about 0.3% and slowly drifting toward its highs near 1,110. The NASDAQ composite is virtually flat with a six-point gain near 2,175. The Dow Industrials are up about 20 points near 10,453. The small cap Russell 2000 is also trading sideways with a gain of less than one point near 593.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
I'm not seeing a lot of movement on the OptionInvestor.com play list with the stock market sliding sideways ahead of the Thanksgiving holiday. The GLD gold ETF is hitting new highs above $116.00. We are seeing some relative weakness in Goldman Sachs (GS) and the stock has hit our trigger to buy puts with today's breakdown under support.