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.
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.|
|(per mil. BTU)|
|(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.
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.|
|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%|
|U.S. Dollar Index||80.670||80.679||-0.74%||3.13%|
|(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%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
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.
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.
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?
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.
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.
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.
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...
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...
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....
u m m m, lost, you might want to use a little introspection after that last post. go ld (b ullion as in GL D) made about 50 pe rcent the past two years. g old mining st ocks (B G EIX) or a solid mid-c ap gr owth mutual fund (TM GF X) both DOUBL ED that performance at 100 p ercent over that time period.
now, my question is how did you miss out on A AP L? it returned 250 perc ent or F IVE TIMES what gold made.
the smart money goes to solid stoc k plays after a bear market or sharp correction. inhale now ....
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.
cantiq lets examine that buy America line of reasoning just a bit. the common consensus is that America will be deleveraging both publicly and privately for a decade or more. with no money to spur growth (let alone invest hundreds of billions in oil refineries) the best bet for economic survival is to become an export nation to the BRIC countries and other developing nations.
if we stop buying their goods and services, and they retaliate by not buying ours, it is we as a nation that will come out on the short end. do you truly advocate that we shoot ourselves in the collective foot and enter a lost decade or two like japan?
inhale deeply please ....
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[BRIEFING.COM] S&P futures vs fair value: -0.60. Nasdaq futures vs fair value: -11.50. The S&P 500 futures trade less than a point below fair value.
The latest weekly initial jobless claims count totaled 304,000, which was lower than the 312,000 that had been expected by the Briefing.com consensus. Today's tally was above the revised prior week count of 302,000 (from 300,000). As for continuing claims, they fell to 2.739 million from 2.750 million. n-bo> ... More
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