The Christmas week started on a positive note as the Dow and
S&P 500 hit all-time highs buoyed by news of a key deal
involving Apple and consumer sentiment reaching a five-month
peak. The all-day bullish sentiment was also aided by indications
from IMF that it would upgrade the U.S.'s economic outlook. The
tech-laden Nasdaq also listed itself in the record book as it
closed at its highest level since Aug 2000. The technology sector
emerged the leading gainer among the S&P industry groups.
APPLE INC (AAPL): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis
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Ahead of Wall Street
The Dow Jones Industrial Average jumped 0.5% to end
yesterday's trading session at 16,294.61. The Standard & Poor
500 (S&P 500) too added 0.5% to reach 1,827.99. The Nasdaq
composite index closed at 4,148.90, a decent 1.1% jump. In its
second consecutive drop, the fear-gauge CBOE Volatility Index
shed 5.4% to 13.04 on Monday. About 4.68 billion shares changed
hands on the nation's exchanges, significantly lower than this
month's average of 6.49 billion. On a day of records, the
advancers obviously outpaced the decliners with 69% stocks
jumping on NYSE.
Both the Dow and S&P 500 rose to all-time highs yesterday.
These benchmarks have achieved such feats on several occasions
through the year. The Dow has gained 24.3% this year, while
S&P 500 has added 28.2% over the same time frame. The Nasdaq
has outperformed the other two, gaining 37.4% in 2013.
The Nasdaq also outperformed the benchmarks yesterday, largely
riding on surging Apple Inc. (NASDAQ:
) stocks. Tech-heavyweight Apple gained 3.8% yesterday after the
iPhone maker announced a key deal with China Mobile Limited
). The deal enables Apple to sell its iPhone through China
Mobile, who has the largest network of mobile phone customers.
Apple also helped S&P 500 to surge, as did Facebook, Inc.
) on its first day of trading as a S&P 500 component.
Facebook shares jumped 4.8% to $57.77. Facebook also clinched a
record intra-day high of $58.32 during yesterday's trading
The technology sector was a big gainer yesterday and the
Technology Select Sector SPDR (XLK) jumped 1.3%. Looking at other
tech bellwethers, Google Inc. (NASDAQ:
), International Business Machines Corporation (NYSE:
), Intel Corporation (NASDAQ:
), Oracle Corporation (NYSE:
) and Cisco Systems, Inc. (NASDAQ:
) gained 1.3%, 1.2%, 1.1%, 1.5% and 2.1%, respectively.
Among the economic data, both consumer sentiment and spending
climbed to a five-month high. The Thomson Reuters/University of
Michigan noted the final reading of consumer sentiment index to
have touched 82.5 in October, up from 75.1 last month. Also, the
Bureau of Economic Analysis reported personal consumption
expenditures (PCE) to have moved up 0.5% in November, as against
a 0.4% gain in October.
Also helping the benchmarks move higher yesterday was an
indication from the International Monetary Fund that it would
upgrade the U.S. economy outoook. Christine Lagarde, managing
director of IMF, said in an exclusive interview: "Good action has
been taken by the Congress to eliminate fear about the Budget.
Fed has also taken some very well communicated action concerning
the tapering. In addition to which, we see some good numbers. All
of that gives us a much stronger outlook for 2014, which brings
us to raising our forecast".
This takes us to last week's major development, namely the
Federal Reserve announcing a cut in its $85 billion bond buying
program. The central bank announced that it will reduce bond
repurchases by $10 billion, bringing its monetary stimulus to $75
billion a month from Jan 2014. At the same time, the Fed also
indicated that the key interest rate would continue to remain at
a record low for a longer period than what was promised
Federal Reserve Chairman Ben Bernanke said the central bank would
introduce similar steps in its upcoming Federal Open Market
Committee meetings. Bernanke said such reductions would continue
if economic data continued to remain positive. He said the Fed
would continue to maintain low borrowing rates in order to
increase spending and propel growth. At the same time, such moves
were aimed at pushing up the low level of inflation, he