Party mood at Wall Street

Jobless claims drop more than expected pushing stocks to fresh fifty-two week high

A deeper-than-expected drop in initial jobless claims bringing it to the lowest level since September 2008, helped push the U.S. stock indices higher for the fifth straight session of gains on Thursday, 24 December, 2009. Wall Street witnessed half a day of trading on that day because of Christmas Eve. With Thursday's gains, indices managed good gains for the week. Wall Street was closed on Friday, 25 December 2009, due to Christmas Day celebration.

For the week, the Dow Jones Industrial Average ended higher by 191.21 (1.9%) points at 10,520.1. Nasdaq ended higher by 74 (3.3%) points at 2285.69. S&P 500 ended higher by 24 points (2.2%) at 1126.48. All ten economic sectors ended higher for the week led by the materials, technology, and energy sectors. The utilities sector was one of laggard.

The week's other corporate developments did not have much to lend support to the market. In the earning area, Walgreen and ConAgra Foods posted slightly better than expected quarterly earnings. Economic data were mixed in nature.

In the earlier part of the week, it was reported that existing home sales rose by a stronger-than-expected rate of 7.4% month-over-month to an annualized rate of 6.54 million units exceeding market estimates of 6.25 million units. The news helped lift the stock market. But later in the week, November new home sales disappointed with an 11.3% month-over-month drop to an annualized rate of 355,000, well below the forecast of 438,000. Still, the data had a limited impact on the market.

Also, the third quarter GDP did not grow as strongly as originally thought. It was reported during the middle of the week that third quarter GDP grew at a 2.2% annual rate, down from the second revision figure of 2.8% and missing the consensus of 2.8%. The lower reading was due to revisions to personal consumption expenditures, gross private domestic investment, change in private inventories, imports and government spending.

The stock market on Thursday, 24 December, 2009, marked an extremely slow session, as expected, as many market participants were off their desks as they took an extended weekend ahead of Christmas. But the economic data of the day managed to push stocks higher.

On Thursday, The Dow Jones Industrial Average ended higher by 54.03 points at 10,520.1. The Nasdaq ended higher by 16.05 points at 2285.69. S&P 500 ended higher by 5.86 points at 1126.48.

The Labor Department in US reported on Thursday, 24 December, 2009 that the first-time claims for state unemployment benefits fell a seasonally adjusted 28,000 to 452,000 in the week ended 19 December, 2009, hitting the lowest level since September 2008. The figure was lower than expectation. The four-week average of new claims fell 2,750 to 465,250, which also hit the lowest level since September 2008.

Initial claims represent job destruction, while continuing claims represent job creation. Benefits are generally available for those who lose their full-time job through no fault of their own. The four-week average smoothes out distortions in the week-to-week data.

Separately, the Commerce Department in US reported on Thursday, 24 December, 2009 that orders for durable goods rose a seasonally adjusted 0.2% in November, 2009.

As per the report, a big drop in volatile aircraft orders was the main reason for the marginal rise in orders. There was a massive 32.6% drop in aircraft bookings. Excluding transportation goods, orders rose 2%. Orders in the latest report were stronger in every major industrial category outside of transportation. Orders for core capital equipment goods, a gauge of business capital investment, jumped 2.9%.

Crude prices shot up considerably higher once again on Thursday, 24 December 2009. Prices continued to rise as energy department reported a more than expected drop in crude supplies for last week a day before. Prices also rose as the dollar fell following couple of economic data.

On Thursday, crude-oil futures for light sweet crude for February delivery closed at $78.05/barrel (higher by $1.38 or 1.8%). Prices crossed $78 mark for the first time in December. Earlier during the day, it fell to a low of $76.17. For the week, crude ended higher by 4.9%.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.1%. The dollar was weak against most of its counterparts following better than expected economic data.

Indian ADRs ended mixed on Thursday. Barring Dr Reddys, Wipro Technologies and Rediff.com, all other ADRs registered gains. Tata Motors was the largest gainer soaring 6.6%.

Trading volume is expected to remain low due to the ongoing holiday mood for next week.

For the year, Dow, Nasdaq and S&P 500 are higher by 19.9%, 44.9% and 24.7% respectively.