Stocks may be winners on Friday
If history is a guide, stocks should have a decent day. But Korean tensions and financial woes in Europe may weigh on the markets. The week ahead will be important.
Admittedly, the day after Thanksgiving is one of those days most investors pay little attention to.
Trading ends early. There's not much volume. There aren't any economic reports or U.S. corporate earnings to move markets. This time, you should keep an ear open to the market news.
The European debt-market problems aren't going away. Korea isn't either. North Korean saber-rattling was hurting Asian and European markets on Friday. The dollar was rallying against major currencies.
That could threaten the reputation of the Friday after Thanksgiving as a winner for stocks.
The Dow Jones industrials ($INDU) have risen on the day after Thanksgiving in 19 of the past 30 years. If you look at the total change between the Wednesday before and the Friday after Thanksgiving, the Dow has risen in 20 of the last 30 years. Futures trading late Thursday suggests U.S. will open modestly higher.
The Dow jumped nearly 350 points on the Wednesday and Friday of Thanksgiving week in November 2008. Sadly, there was no follow-through. The blue chips fell 679 points on the following Monday. But 2008 was, after all, a horrible year.
2009 wasn't much kinder. The Dow dropped 154 points on the Friday after Thanksgiving. But November 2009 was a good month. The index jumped 6.5% and rose an additional 0.8% in December.
So far, the Dow is up 0.6% this month, with the Standard & Poor's 500 Index ($INX) up 1.3% and the Nasdaq Composite Index ($COMPX) up 1.4%.
All that said, the past is not prologue.
Boeing (BA) may pressure the market Friday. Late Wednesday, the company said that it must modify portions of the electrical system on its 787 Dreamliner, after an in-flight fire aboard a test plane two weeks ago.
That will likely delay the first delays of the plane. A new delivery schedule will come out in a few weeks.
Boeing closed Wednesday up 2.9% to $65.41. A one-dollar move in its shares is equal to about 8 Dow points.
Moreover, the European situation remains very serious.
Ireland has agreed to cut its domestic budget by 20% over the next four years, which guarantees its economy will crawl over that time frame.
There are worries that the debt problems of Portugal, the poorest nation in the European Union, will require emergency assistance, perhaps as early as next week. And then come the problems of Spain, whose economy is larger than the economies of Ireland, Portugal and Greece combined.
At the same time, markets across Asia and in Europe were lower on Friday after North Korea said that impending military exercises by the South and the United States were pushing the region toward conflict.
Japan's Nikkei-225 Index ($JP:N225) was off slightly, but losses were deeper for markets in Shanghai, Seoul, and Indonesia.
Next week will likely be volatile. Especially if Europe's crisis continues. There will be lots of talk about whether retailers saw strong holiday shopping over the weekend. Real numbers, however, will be hard to come by.
The week also will feature a number of important economic reports. The most important will be the monthly unemployment and payrolls report on Dec. 3.
In addition, the Chicago Purchasing Managers Index November report on manufacturing in that area is due Tuesday with the monthly Institute for Supply Management manufacturing due on Dec. 1.
Automakers will report November sales on Dec. 1.
Earnings include Barnes & Noble (BKS) on Tuesday, teen retailer Aeropostale (ARO) and Sycamore Networks (SCMR) on Dec. 1 and supermarket operator Kroger (KR) and homebuilder Toll Bros. (TOL) on Dec. 2.
The problem with the market lately. Is that a little problem will send it down a lot. If it is good news it still might go down a little.
Boeing worries me though. It outsourced many of components and has had lots of problems with quality control. It has lost its big lead over Airbus.
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[BRIEFING.COM] The S&P 500 (-0.2%) hovers near its session low with one hour remaining in the trading day. Meanwhile, the price-weighted Dow Jones Industrial Average (-0.1%) continues outperforming as 20 index members display losses, while the remaining ten components sport gains.
The index has received a measure of support from Boeing (BA 130.06, +2.51), which trades higher by 2.0% after beating on earnings and revenue. Elsewhere, Procter & Gamble (PG 80.31, -0.30) ... More
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