Benchmarks rallied after President Barack Obama and John
Boehner made encouraging comments about reaching an agreement on
the "fiscal cliff" dilemma. Federal Reserve's released its latest
"Beige Book" reports which revealed that the U.S. economy grew at
a "measured pace". Meanwhile, U.S. new home sales declined in
October. The consumer discretionary sector was the major gainer
among the S&P 500 industry groups.
The Dow Jones Industrial Average (DJI) jumped 0.8% to close
the day at 12,985.11. The Standard & Poor 500 (S&P 500)
gained 0.8% to finish yesterday's trading session at 1,409.93.
The tech-laden Nasdaq Composite Index rose 0.8% to end at
2,991.78. The fear-gauge CBOE Volatility Index (VIX) dropped 2.6%
to settle at 15.51. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 6.1
billion shares, significantly lower than the daily average of
6.48 billion shares. Advancing stocks easily outpaced decliners
on the NYSE; as for 67% stocks that rose, only 29% stocks moved
Yesterday's trading began with a negative domestic report amid
concerns over ongoing the fiscal cliff issue which has now been
affecting markets for months. In the early part of trading, the
blue-chip index lost as much as 112 points. But the markets
rebounded from their initial losses after Barack Obama and John
Boehner made positive comments about the fiscal cliff dilemma,
which boosted investor sentiment.
Speaker of the United States House of Representatives John
Boehner said he is hopeful that a deal could be reached about the
fiscal cliff. He also said policy makers which are involved in
the fiscal cliff negotiations can "avert this crisis sooner
rather than later". President Barack Obama also made encouraging
statements about the fiscal cliff of $600 billion which will take
effect from the beginning of 2013. Obama said: "My hope is
to get this done before Christmas".
Meanwhile, President Obama met business leaders on Wednesday
to discuss the fiscal cliff dilemma. After the meeting Goldman
Sachs Group, Inc. (NYSE:
) CEO Lloyd Blankfein said Obama's plan to reach a deal on the
impending fiscal cliff is very specific. He also said a modest
increase in tax rates may have to be done to strike a deal. In an
interview with CNBC after the meetings with Obama and business
leaders Blankfein said it is difficult to say whether a deal
could he reached or not but "if I were involved in a negotiation
like this, and everybody was purporting to be where they are, I
would say that an agreement was reachable".
The Federal Reserve released its latest Beige Book on November
28 which noted that U.S. economic increased at a "measured pace"
in October and in the early part of November. According to
the reports, economic activity improved in nine out of the twelve
Federal Reserve's districts. New York, Philadelphia and Boston
posted weaker growth as these areas were affected by Hurricane
Sandy. Consumer spending increased moderately whereas the
manufacturing sector reported mixed results in most of the
districts. Except Boston and Philadelphia, conditions of
single-family homes continued to improve. Hiring picked up in
most of the districts.
Separately, U.S. Census Bureau and the Department of Housing
and Urban Development jointly reported new home sales data which
noted a decline in U.S. home sales in October. According to the
report, sales of new single-family houses decreased 0.3% to a
seasonally adjusted annual rate of 368,000 in October from the
revised September figure of 369,000. This was below the consensus
estimates of 388,000. The September figure was sharply revised
down to 369,000 from 389,000.
Coming to sectoral stocks, The Consumer Discretionary SPDR
(XLY) gained 1.3% and was the major gainer among S&P 500
industry groups. Stocks such as Target Corporation (NYSE:
), Costco Wholesale Corporation (NASDAQ:
), Wal-Mart Stores, Inc. (NYSE:
), Macy's, Inc. (NYSE:
) and Saks Inc (NYSE:
) surged 0.4%, 6.3%, 1.5%, 1.8% and 4.1%, respectively.
COSTCO WHOLE CP (COST): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
SAKS INC (SKS): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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