Monday, December 23, 2013
Favorable consumer spending data and boost from
) China deal should help sustain the market's positive momentum
in today's session. Stocks were up strongly last week on a
delayed seasonal bump, with the Fed announcement pushing stocks
towards closing an impressive year in style. Volumes typically
thin out in these final sessions, but the overall sentiment
should remain positive.
This morning's positive consumer spending report builds on the
recent run of favorable economic data. The positive revision to
the Q3 consumer spending data in Friday's final look at the GDP
report showed the improving trend coming into the final quarter
of the year. The 'headline' Q3 GDP growth had a big inventories
component, reversal of which is expected to keep Q4 GDP growth at
roughly half of that quarter's growth pace. But improvements on
the spending front, along the lines of this morning's reading,
will be the more important metric than any pullback in the
current quarter's 'headline' GDP growth.
On deck for release a little later today is the final look at the
University of Michigan Consumer Sentiment survey for December,
which is expected to show a modest gain from the preliminary
December read a few weeks back, but materially up from the
shutdown-induced weakness the month before. This key measure of
consumers' mood will end the year below the July high, but has
nevertheless showed notable momentum this holiday month.
The only useful economic data coming out the rest of this
holiday-shortened week is coming out Tuesday when the November
Durable Goods and New Home sales numbers come out. The
expectation is for some loss of momentum in the home sales
numbers tomorrow, but that is largely relative to the blowout
numbers the month before. Inventories remain low and the overall
trend continues to remain favorable.
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In corporate news, Apple has finally struck a deal with China
Mobile that will make iPhones available to China Mobile's more
than 700 million subscribers early next year. The long-awaited
deal had been in the works for years, with the sticking point
being details like pricing gand revenue sharing. We don't know
those as to how those issues got resolved in the final deal, but
this nevertheless provides the iPhone maker a better platform for
competing effectively with Samsung and others in the Chinese
market. In other news, Facebook (FB) shares start trading as part
of the S&P 500 index today.
Director of Research