Stocks caught a bit of a ride off Santa's sleigh before running out of breath from a solid journey this year.
Following the Christmas holiday, stocks reopened on Tuesday still feeling merry, and climbed upwards throughout the day. Falling oil prices, signs of a rebounding housing market, and last-minute institutional buying brought more cheer to the market on Wednesday. Stocks advanced broadly, and the Dow closed above the 12,500 level for the first time.
On Thursday, profit-taking and a session marked with strengthening economic reports led to concerns about future Fed interest rate action and to a small decline in equities. Perhaps worn out from a year of giddy gains, stocks headed into the extended holiday weekend lower again, in extremely light holiday trading on Friday.
Markets will remain closed today in honor of President Gerald Ford, reopening tomorrow after a four-day break. Economic data scheduled for release includes the December ISM manufacturing survey today, auto sales and the release of the minutes from the last Fed meeting tomorrow, pending home sales, factory orders, and the December ISM non-manufacturing survey on Thursday, followed by December employment figures on Friday.
Corporations scheduled to release earnings include Sonic on Wednesday, Constellation Brands and Monsanto on Thursday, and Global Payments on Friday.
Stay market-tuned and Foolish!
Capital Markets Summary
U.S. Equities
|
12/29/06 Close |
Weekly Change (%) |
YTD Change (%) |
|
|---|---|---|---|
|
Dow |
12,463.15 |
1.0 |
16.3 |
|
Nasdaq |
2,415.29 |
0.6 |
9.5 |
|
S&P |
1,418.30 |
0.5 |
13.6 |
Commodities
|
Price ($) |
Weekly Change (%) |
|
|---|---|---|
|
Crude oil |
60.95 |
-2.34 |
|
Gold |
638.90 |
2.67 |
Foolish Quiz
1. True or false: The stock market's rally this past year encompassed most sectors.
2. True or false: General Motors
3. True or false: Apple
4. In which year did the shopping period between Thanksgiving and Christmas rack up greater sales: 2005 or 2006?
5. Which company reported its best holiday season ever, despite the disappointing retail-sales holiday shopping report: Amazon.com
6. True or false: Savvy Savvis shareholders celebrated the offer from Level 3 last week to purchase part of its business.
7. True or false: Denver's latest snowstorm grounded airline shares last week.
8. True or false: President Ford was subject to an impeachment vote while serving as a director for Citigroup
9. True or false: The Big Board has closed for the observance of a U.S. President's funeral each time since the turn of the 20th century.
10. Which factors contributed to the market's rise over the year:
(a) Earnings growth
(b) Interest-rate hikes
(c) Geopolitical stability
(d) Your increased financial acumen
Answers
1. True. Nearly every sector gained, with energy and telecom leading the way higher.
2. True. GM championed the "Dogs of the Dow" theory, which posits that the worst performers of the Dow in one cycle outperform the rest in the next. Shares of GM lost 51.5% in 2005 and gained 64% this past year. Woof!
3. False. Apple shares rose 3.2% last week, despite midweek losses arising from charges of falsification of options documents and the news that CEO Steve Jobs received an options grant unapproved by the board. On Friday, shares gained after the company filed its delayed quarterly report and cleared Jobs of any wrongdoing.
4. 2005. According to a retail data service report, year-over-year retail sales rose 6.6% during this year's shopping period, compared to an 8.7% increase in 2005.
5. Amazon. On Tuesday, the e-tailer proclaimed this year its best holiday season ever, although its shares still stumbled 1.1%. Perhaps those purchases weren't being paid for with MasterCard, whose shares slipped 1.3% the same day, along with several other retailers, bringing the S&P Retail Index down 1.3%.
6. False. Despite rising 3.1% on Tuesday following the news that Level 3
7. False. Although it appeared that Mother Nature's latest missive to the snow-wary West might also ambush airline shares, the Amex Airline Index rose 2%. Lower oil prices likely helped ward off the chill.
8. True. The Wall Street Journal's Washington Wire recalled that President Ford held the position of "honorary director" of Citigroup, a position appointed by the board and not subject to shareholder vote, after he left office. An attempt by certain shareholders in 1999 to eliminate his title was known as the "Ford impeachment vote," and failed. President Ford remained an honorary director until his death and enjoyed a close friendship with former Citigroup Chairman and CEO Sandy Weill.
9. False. Although the Big Board usually honors deceased presidents by closing for the day, on several occasions, the exchange only closed for a few hours -- except in 1901, for President Benjamin Harrison. It seems that someone didn't care too much for our 23rd president, because the exchange remained open despite his funeral. No reason exists in the NYSE's archives to explain its inaction.
10. (a), (d). While solid earnings growth continued, a late-summer rally kicked into gear only after it appeared that the Fed's interest rate hike campaign had ended. As for geopolitical strife, there were always elements of concern, especially in the Middle East, which worried the market. Perhaps not always recognized by commentators, let's not forget your contribution as well, as an educated investor adding liquidity and hopefully some sanity to the market!
Scoring
- 8-10 correct: Foolishly impressive.
- 6-7 correct: Almost Foolish.
- 1-5 correct: OK, but just barely.
- 0 correct: Really?! Keep reading the Fool, and watch your scores improve!
MasterCard is an Motley Fool Inside Value pick. Amazon.com is a Motley Fool Stock Advisor selection. Whatever your investing style, the Fool has a newsletter for you.
Fool contributor S.J. Caplan, a former vice president and assistant general counsel of Goldman Sachs and former vice president and derivative finance specialist at Lehman Brothers, owns shares of NYSE Group. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.
