Stock Market News for December 27, 2011 - Market News

Thanks to a 'Santa rally' markets garnered decent gains spurred by a second day featuring positive economic reports. Additionally, temporary extension of payroll tax-cuts by the House of Representatives and the Senate brought relief to investors. The S&P500 entered positive territory for the year while the Dow extended its gains.

The Dow Jones Industrial Average (DJIA) inched by a percent to settle at 12,294. The Standard & Poor 500 (S&P 500) was up 0.9% and finished trading at 1,265.33. The Nasdaq Composite Index gained 0.7% to move up to 2,618.64 at the close of trading session on Friday. Meanwhile, the fear-gauge CBOE Volatility Index (VIX) dropped once again, by 2.0% to 20.73. Total volumes on the New York Stock Exchange (NYSE) were 2.2 billion shares, almost half of the recent average. On the NYSE, for 67% of the advancing stocks, 29% declined. The remaining 4% was unchanged. Benchmarks also enjoyed weekly gains with the Dow, S&P 500 and the Nasdaq gaining 3.6%, 3.7% and 2.5%, for the week.

With only a few trading sessions remaining for the year, the S&P 500 moved into the positive territory, thanks to Friday's gains. The S&P 500 is now up 0.6% for the week and it had begun 2011 at 1,257. The Dow extended its gains and is now up 6.2% for the year. However, the tech-laden Nasdaq is languishing in the negative zone, and is down 1.3%. If it clocks in gains on the remaining days of the week, even the Nasdaq can end the year on a positive note by settling in the green.

It was encouraging economic data that largely contributed to the Santa rally. Durable orders came in positively coupled with home sales data. Personal income and spending could not match up to economists' expectations, but did not drag the benchmarks lower. As for the report on durable orders, the U.S. Census Bureau said new orders for manufactured durable goods increased 3.8% to $207.0 billion in November. This topped the consensus for the current period, which predicted an increase of 2.5%. Excluding transportation, new orders went up 0.3%.

In a joint release by the by the U.S. Census Bureau and the Department of Housing and Urban Development, new home sales was reported to have moved up and the increase was also ahead of the consensus estimate. According to the report, new single-family houses sales were at a seasonally adjusted annual rate of 315,000 in November 2011. This bettered estimates of an increase to 314, 000 and was 1.6% higher than the revised October rate of 310,000.

The data was not overwhelming, nor did it beat estimates by a huge margin. Nonetheless, home sales did improve and added to the positive sentiment about the housing sector that was created by a report from the Commerce Department stating that privately-owned housing starts had increased 9.3% in November as compared to October levels. Meanwhile, building permits shot up to its highest level since March 2010. Offsetting some of the mood was home sales data from the National Association Realtors (NAR) released on Wednesday. Additionally data on revised home sale counts of 2007 according to which existing home sales were 14.3% worse than previously reported came as a disappointment to investors.

Personal spending and income data also gave investors little to cheer about. The Bureau of Economic Analysis reported: "Personal income increased $8.5 billion, or 0.1 percent, and disposable personal income (DPI) decreased $5.0 billion, or less than 0.1 percent, in November". Personal spending also rose by 0.1%, which came in below consensus estimates of an increase of 0.3%.

Markets also received a boost from news of a temporary extension of payroll tax-cuts by two months. Washington gave the green signal for an extension of payroll tax-cuts that was supposed to expire on December 31, 2011. Congress approved the extension of payroll-tax cuts for 160 million workers.

The tech-laden Nasdaq has been left all alone in the red zone for the year. However, the tech sector enjoyed a day of increases on Friday and the Technology Select Sector SPDR ( XLK ) fund inched up almost a percent. Stocks like International Business Machines Corp. (NYSE: IBM ), Oracle Corporation (NASDAQ: ORCL ), Microsoft Corporation (NASDAQ: MSFT ), Google Inc. (NASDAQ: GOOG ), Red Hat, Inc. (NYSE: RHT ) and Adobe Systems Inc. (NASDAQ: ADBE ) gained 1.5%, 1.4%, 0.9%, 0.6%, 1.9% and 1.5%, respectively.

ADOBE SYSTEMS ( ADBE ): Free Stock Analysis Report

GOOGLE INC-CL A ( GOOG ): Free Stock Analysis Report

INTL BUS MACH ( IBM ): Free Stock Analysis Report

MICROSOFT CORP ( MSFT ): Free Stock Analysis Report

ORACLE CORP (ORCL): Free Stock Analysis Report

RED HAT INC (RHT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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