Stocks look set to end 2009 on a down note although losses in the NASDAQ and Russell 2000 are mild today. The Dow Industrials is the worst performer among the big indices. Take your pick on why stocks are down. It could be last minute profit taking, worries that the economy is improving too fast and the Fed will be forced to raise rates, or the surprising news that the Institute for Supply Management has already revised the Chicago PMI data lower and the report just came out yesterday!
Foreign markets were generally higher. The Japan and German markets were closed today. The Chinese Shanghai closed up 0.45% on the session and up 80% for the year following a painful 65% decline in 2008. The Hong Kong Hang Seng rallied 1.75% to make its yearly gain +52%. Tomorrow will bring a new report on Chinese manufacturing activity. Across the globe most of the European markets closed their books on the best year since 1999. The French CAC-40 eked out a +0.02% gain. The English FTSE rose 0.28%.
The jobless data out today was the headline story this morning. The Labor Department said weekly initial jobless claims fell 22,000 to 432,000. Economists were expecting 460,000. At 432,000 this is the lowest level since July 2008. The four-week moving average marked its 17th weekly decline with a drop to 460,250. Continuing claims fell 57,000 to 4.9 million. Unfortunately the continuing claims data does not count the millions of workers who have used up their unemployment benefits.
It has been suggested that this morning's improvement in the weekly jobless claims could be the reason stocks are lower. If the economy and unemployment improves too quickly the fear is that the Federal Reserve will have to raise rates sooner than expected. Personally I don't believe this is a real risk since unemployment will likely be stubbornly high for all of 2010.
In corporate news shareholders at Marvel Entertainment (MVL) voted in favor of the $4.3 billion acquisition by Disney (DIS). MVL shareholders will receive $30 in cash plus 0.745 shares of DIS for every share of MVL. MVL is currently trading near $54.20.
Commodities were in the headlines again as a drop in the U.S. dollar this morning gave commodities a boost. The dollar has since pared its losses but commodities remain a big winner on the year. Crude oil hit $80.00 a barrel for the first time in weeks and is currently up 78% for the year. Gold futures are up about $5 near $1,098 an ounce. The shiny metal is up 25% for the year on track to post its ninth annual gain in a row. Gold hasn't seen a winning streak that long since the 1940s. Copper more than doubled on the year. Sugar prices are at multi-decade highs with a 129% rally for the year. Even lead prices saw a 142% rally in 2009.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Sadly with the market stuck in this sideways trading range we're not seeing much movement on the OptionInvestor.com play list. The S&P 500 looks like it will close 2009 with a 24% gain. The NASDAQ is up 44.8% in 2009. The Russell 2000 is up 26.4%. The Dow Industrials look poised to close 2009 with a 19.6% gain.
Happy New Year!