Dow up 21; gold tops $1,400

Early selling, due to weak news on housing and consumer confidence, eases as oil and gold move higher. GM rises on a wave of buy ratings. Interest rates jump.

By Charley Blaine Dec 28, 2010 3:12PM
Charley BlaineUpdated: 7:15 p.m. ET

On a quiet day of trading, there were two clear winning groups of stocks: gold and energy. Both jumped as commodity prices moved higher.

Gold moved up $22.70 to $1,405.60 an ounce. Its 1.6% gain was its biggest on a percentage basis since Nov. 4. Crude oil moved up 49 cents to $91.49 a barrel, as traders speculated that global growth will spur new demand.

So, the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) managed small gains, despite disappointing news on consumer confidence and housing. The blue chips were up 21 points to 11,576. The S&P 500 added 1 point to 1,259.

The Nasdaq Composite Index ($COMPX) finished down 4 points to 2,663, despite gains for Apple (AAPL), Qualcomm (QCOM) and Cisco Systems (CSCO).

For some cheer, take a peek at General Motors (GM), up 2.1% to $35.32 after seven -- count 'em -- investment houses came out with buy ratings on the stocks.

Coming on Wednesday are the weekly reports on domestic oil and fuel inventories and mortgage applications. Futures trading suggests a flat open.

A big day for gold
Before falling back, gold rallied to as high as $1,407.20 an ounce after the dollar initially fell today against major currencies. The pullback came as a weak auction of 5-year Treasury notes pushed interest rates -- and the dollar -- higher. Silver was up 3.4% to $30.26 an ounce.

Gold mining stocks moved higher, with Newmont Mining (NEM) up 2.4% to $61.55. Barrick Gold (ABX) added 2.6% to $52.96.

The five-year Treasury yield rose to 2.15% from Monday's 2.149% after the auction of $35 billion in notes produced a yield of 2.149%, higher than expected. Demand was lighter than expected. The 10-year yield jumped to 3.481% from 3.351% on Monday.

As crude moved higher, so did the national retail price of gasoline. It hit $3.049 a gallon, AAA's Daily Fuel Gauge report said, up from $3.042 on Monday. Crude is up 15.3% on the year; gasoline at the pump is up 15.5%.

The dollar moved up against the British pound and the euro but down against the Japanese yen. The U.S. Dollar Index, which measures the greenback against six other currencies, fell to as low as $79.89 but came back to close at $80.67, down slightly on the day.

Energy prices -- New York close
 

Tues.

Mon.

Month chg.

YTD chg.
Crude oil 

$91.49

$91.00

8.77%

15.28%
(per barrel)











Heating oil

$2.5243

$2.5166

8.95%

19.32%
(per gallon)











Natural gas 

$4.2160

$4.1120

-0.86%

-25.34%
(per mil. BTU)











Unleaded gasoline

$2.4056

$2.4209

6.20%

17.18%
(per gallon)











Retail gasoline

$3.0490

$3.0420

6.83%

15.54%
(per gallon; AAA)












GM's buy ratings
Seven Wall Street firms slapped buy ratings on the automaker's shares. Most were involved in the company's Nov. 15 initial public offering. Under Securities and Exchange Commission rules, they couldn't publish research on the auto giant for 40 days after the IPO.

The ratings came from analysts at JPMorgan, Barclays, Bank of America, Morgan Stanley, Citigroup, Royal Bank of Canada and Credit Suisse.

CEO Dan Akerson has said the automaker can make "significant" profit amid U.S. sales about 30% below the 16.8 million unit annual average from 2000 to 2007. U.S. sales may rise to 12.9 million units next year, Michelle Krebs, a senior analyst at Edmunds.com, told Bloomberg Television on Monday.

A potential risk, however, is if gasoline prices rise to $3.50 a gallon or more and cause consumers to rethink car purchase plans.

Rival Ford Motor (F) was off 0.8% to $16.73.
Consumer confidence ebbs
The Conference Board's Consumer Confidence Index fell to 52.5 in December from 54.3 in November, suggesting that Americans remain concerned about job security and are reluctant to spend.

When asked on CNBC today what will improve consumers' moods, Conference Board economist Ken Goldstein said simply, "Jobs, jobs, jobs."

Consumer purchases account for two-thirds of U.S. gross domestic product, making it a critical factor in the economic recovery. Economists had expected the gauge to rise to 56.

Housing markets weaken
A new report showed the housing market continues to struggle to rebound from the recession.

The S&P/Case-Shiller 20-city home price index, which tracks home values in major U.S. cities, fell 1% in October, its third  straight decline. From October 2009 through October 2010, the index slipped 0.8%.

The report suggests that analysts who saw a double-dip recession in housing may be right. Prices hit a bottom  in April 2009 and slowly moved higher, in part because of homebuyer tax credits.

Since the credits have expired but foreclosure problems haven't gone away, prices appear to be getting pressured again.

Using data that are not seasonally adjusted, all 20 markets covered by the index saw declines in October from September. Only four markets -- Los Angeles, San Francisco, San Diego and Washington, D.C. -- saw price gains over the last 12 months.

Prices in six markets -- Atlanta; Charlotte: Miami; Portland, Ore.; Seattle and Tampa -- hit new lows from their 2006 highs.

Not surprisingly, homebuilding stocks were lower. D.R. Horton (DHI) was the weakest S&P 500 stock, down 3% to $11.80.

An upward bias in the market
Seventeen of the 30 Dow stocks were higher, led by Chevron (CVX), up 1.2% to $91.19; Hewlett-Packard (HPQ), up 1% to $42.25; and Cisco Systems, up 0.9% to $20.35. 

American Express (AXP) was the laggard, down 0.6% to $42.79.

Meanwhile, only 32 Nasdaq-100 ($NDX.X) stocks were higher, and the index was up 4 points to 2,227. The leaders were Sears Holdings (SHLD), up 2.3% to $70.02; and Netflix (NFLX), up 2% to $183.67.

Apple (AAPL) was up 0.2% to $325.47 but hit a new 52-week high of $326.66. Apple is up 54% this year.

Short hits from the markets -- New York close
 
  Tues.     Mon.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.140%

0.140%

-12.50%

180.00%
5-year Treasury note 

2.150%

2.049%

46.86%

-19.96%
10-year Treasury note

3.481%

3.351%

24.45%

-9.42%
30-year Treasury bond

4.549%

4.422%

10.90%

-1.98%
Currencies











U.S. Dollar Index

80.670

80.679

-0.74%

3.13%
British pound

$1.5389

$1.5425

-1.15%

-4.86%
(in U.S. $)











U.S. $ in pounds

£0.650

£0.648

1.17%

5.11%
Euro in dollars

$1.312

$1.317

1.01%

-8.44%
(in U.S. $)











U.S. $ in euros

€ 0.762

€ 0.759

-1.00%

9.22%
U.S. $ in yen 

82.645

82.770

-1.40%

-11.13%
U.S. $ in Chinese

6.648

6.627

-0.70%

-2.61%
yuan











Canada dollar

$0.999

$0.994

2.43%

5.07%
(in U.S. $)











U.S. dollar 

$1.002

$1.006

-2.37%

-4.83%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,405.60

$1,382.90

1.49%

28.22%
(per troy ounce)











Copper

$4.33

$4.28

13.21%

29.33%
(per pound)











Silver

$30.32

$29.26

7.59%

80.01%
(per troy ounce)











Wheat 

$7.9825

$7.8025

22.71%

47.41%
(per bushel)











Corn

$6.2325

$6.1525

17.59%

50.36%
(per bushel)











Crude oil 

$91.49

$91.00

8.77%

15.28%
(per barrel)












27Comments
Dec 28, 2010 3:48PM
avatar
Gee,

Seven Wall Street firms slapped buy ratings on the automaker's shares. Most were involved in the company's initial public offering.

No conflict of interest here.  Maybe they got stuck with GM shares they couldn't sell.  Let the suckers by it, bid it up and then they can dump their shares at a tidy profit.  More pump and dump.

Have a happy new year.Smile

Dec 28, 2010 9:06PM
avatar

I think my tenants are being unreasonable.

I instituted a new policy by which those that have more income pay more rent and that those that are unemployed or illegal pay little or no rent. I suggested that if the collective income of all the rents is not sufficient to cover the costs plus my bloated salary that I would take out a loan and have all the tenants cosign. For some reason they don't think this is a good plan.

I simply don't understand as nearly all of my tenants voted for and continue to support the current administration I expected them to embrace my new plan with the same gusto.

Dec 28, 2010 6:00PM
avatar
I have been predicting and crying to a deaf crowd about the price of gasoline going back up and re-releasing it's economic destruction...it appears this could be about to happen as oil prices are going up, and according to this website, it is based upon SPECULATION....not real value, but speculation, which is an ambiguous value based upon temporary perception only...which means a small percentage of wealthy investors will make tons of $ while most of us will suffer a repeat of 08 as we will not be able to afford to fill our gas tanks...only this time, americans won't have time to buy with their credit, because many of them filed bankruptcy after 08, and also, they dipped into their equity in their house values...something else that is no longer available...so, imagine this scenario....october of 08 happens in october of 11 and what will be the impact? And look at GM...what have they done differently? Are they prepared to face another 08? Are you kidding me? I am being bombarded with t.v. commercials for those monster trucks....didn't anybody learn anything? Where is the common sense? If gas goes back up to $4, GM will also relive it's 08 results....Oil oil oil...those gasoline prices that follow oil prices...they are the culprit of the 08 disaster....it was covered up by the "housing crisis" which was indeed a crisis, but it was a disease brought on by the greater, underlying cause...the greater disease which is speculation trading which falsely overvalues oil market prices and crushes the economy of most of us, while make millions for the tiny minority...and if you are a u.s. citizen, it is important to make these millions in the next 2 years while the bush tax cuts are still available...this luxury is doomed to be reverse dramtically in the next 2-4 years....wow, why is it that a bachelors level, everyday guy like myself can see this monster brewing silently in the kitchen of our economy? Call me a fool, but save that name calling for the next 2 years and then call me a fool and I will have to concede on this particular matter. We are all being dooped...AGAIN!!
Dec 28, 2010 8:25PM
avatar
I post here and read a lot.  I really have a hard time understanding the mindset, that something is owed to "us."  I am fairly successful, not because I depend on circumstances outside of myself. I go after what I need.  Freedom.   I think we have become soft in this country.   I did this, so I deserve that.  Seems to be the mantra.  Expectations.  Injustice is always the standard.  Life is suffering.  Birth/Life/Death. The more the focus is on that, the more we feel we are unsuccessful/unable/unhappy.  I am learning, as I get older, life doesn't  get easier, it just take more time to get things done and I have more aches and pains at the end of the day.  Perspective is everything.  Enjoy it, it is painfully short.
Dec 28, 2010 8:15PM
avatar

Good points Tumbleweed!

 

The government can't spend the country out of joblessness.

The only way to get America moving is to stop buying foreign! Keep the unemployment money in the US.

People have been saying that for years! Buy American.

When you buy anything check where it was made. If made in China, guess where your jobs are going?

Dec 28, 2010 6:58PM
avatar
I didn't know that, but certainly an interesting piece of knowledge.

We have basically shut down any new oil production on our shores, but we give hundreds of billions to the likes of Brazil and Mexico to encourage them to produce more oil.  This is a new, grander form of wealth re-distribution with potentially extremely dangerous consequences, first and foremost being the damage done to our national security interests.

Dec 28, 2010 6:18PM
avatar
Clearly gas prices are related to oil prices, but the two don't work in direct correlation.  Remember when oil was $20/barrel and gas was about $1/gallon.  When oil went to $140/barrel, gas should have gone to $7 if they were directly correlated.  However, they weren't, and gas only went to $4/gallon.

Now, if we would just open up every available shale and offshore drilling site in our own country.  This would immediately create hundreds of thousands of jobs, and would result in millions of new jobs over the next couple of years.  The net result would be lower unemployment and lower energy prices - 2 things that are essential for a fast, full blown economic recovery.  Build a few more refineries and happy days would be here again.

Dec 28, 2010 6:10PM
avatar

Gold continues to offer a hedge against the unexpected.  Bonds are toast.  I still like stocks, but I prefer low PE high yielders, especially energy-related companies, over the high flyers.  If I can buy Chevron for 10 or 11 times earnings, plus get a decent yield, why would I take a chance on something selling at 50 times earnings? It must be my conservative nature.

Dec 28, 2010 4:20PM
avatar
Or, you could look at it like this:  a bunch of these huge banks, er, "Wall Street firms" got a bunch of bailout money from the federal government, who also happens to heavily regulate them.  This is the same federal government who owns much of GM.  Obviously the "Wall Street firms" aren't going to bite the hand that feeds them or upset the apple cart by giving a government owned company a bad rating.  And so, as if by magic, these government funded and regulated "Wall Street firms" just happened to give a good rating to a government owned company.  Kinda like a stupid chick who's banging her biology professor - somehow she manages to get an "A".
Dec 29, 2010 4:16PM
avatar

This Planet.... 

 

I increased my tenants rent by the amount of real estate tax increase + 10%.   I explained this to them.  Some suggested I eat this cost.   I told them goodbye, either pay or move... 

 

Much like corporate taxes, real estate taxes on rental property are ENTIRELY paid by the tenants...  I think they understand this now.

 

But alas, it is only 1 6 flat...

Dec 29, 2010 4:12PM
avatar

Active RIA, you are correct!  Smart money does go into stocks, ESPECIALLY when they are inflating like the FED is.  

 

Stocks are psuedo-currency, liquid and backled by corporate assets and future earnings.   Unlike the greenback, which is backed by a printing press and blind faith.  

 

Buy stocks, invest overseas, and buy Au/Ag/Cu...

 

All commodities are better than dollars or dollar denominated bonds...

Dec 29, 2010 4:08PM
avatar

Sounds like a good time to get rid of the gas taxes to me chipper J... why is 1/3 the price tax?  not to mention the corporate tax thats in the price too...

 

Another reason to get RID of Mr. Obama....

Dec 29, 2010 10:50AM
avatar
Lets see.
Income tax revenue will be interesting this year with all the unemployed. underemployed,self-employed,pay outs tax credits...bla.bla.bla.. Spin it!

$4 gallon gas!!! this will be interesting.
Talk about cutting off your nose.
 Hold on if you still have the ability.
 Go to school and get into medical,there are more sick on there way,recession proof,or a mortician.
Dec 29, 2010 1:36AM
Dec 29, 2010 12:19AM
avatar
Ron.  Thanks for the kindred spirit and support.
Dec 29, 2010 12:11AM
avatar

Dharmabum1

 

   Great piece....I agree.

 

I post here and read a lot.  I really have a hard time understanding the mindset, that something is owed to "us."  I am fairly successful, not because I depend on circumstances outside of myself. I go after what I need.  Freedom.   I think we have become soft in this country.   I did this, so I deserve that.  Seems to be the mantra.  Expectations.  Injustice is always the standard.  Life is suffering.  Birth/Life/Death. The more the focus is on that, the more we feel we are unsuccessful/unable/unhappy.  I am learning, as I get older, life doesn't  get easier, it just take more time to get things done and I have more aches and pains at the end of the day.  Perspective is everything.  Enjoy it, it is painfully short.
 I learned this a while back....you can achieve whatever you set your mind to no matter what your "circumstances". Believe in yourself and surround yourself with the same kind of people. Freedom is what makes this country so great. Nice to read some positive words once in a while...thanks.
Dec 28, 2010 9:29PM
avatar
Lost.  Hoping you are one of those astute investors, that has made money from your keen observations?  PS I would still be careful with gold.  Like all the plethora of strange stock symbols, it is still su****ect to supple and demand.  Volatility.  Making money is the goal.
Dec 28, 2010 9:26PM
avatar

Most all the regular dummies here change their minds like a baby in diapers with diarrhea. LMAO Eye-rolling And where's all those GOLD haters disappeared to? LMAO Sick You all could have invested in gold 2 years ago and sold it tomorrow morning for a HUGE profit. Same goes for oil and food. Keep buying those GM, AIG and BOA stocks,... dumb a$$es! LMAO Crying

Dec 28, 2010 9:17PM
avatar
I find it disappointing here, for those that cannot separate their own struggle, from the whole.  We, as a nation, need to take responsibility.  Personally.  The blame, is a mirror, that reflects our own image.  Blame is a vicious cycle, that handicaps the person trying to help themself.  IMO.
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