Will Santa Claus deliver the gift of 10,000 for the Dow Jones Industrials for Christ-mas? Or will the Grinch create another dour holiday on Wall Street?
The markets ended mixed in the week to Friday as stocks stumbled trying to cross the psychological barriers of Dow 10,000 and NASDAQ 2,000, although some analysts say these figures could be baked into the cake for Christmas.
The Dow blue-chip index gained 0.82 percent in the week to 9,682.68 but the NASDAQ composite -- which managed to briefly hit 2,000 before a selloff took hold -- dropped 1.4 percent for the week to end at 1,937.82.
The broad-market Standard and Poor's 500 index managed a modest gain of 0.31 percent for the week to end Friday at 1,061.50.
The mixed performance came despite a string of stellar economic data, including one report showing US manufacturing activity shot to a 20-year record in November.
The only fly in the ointment was a disappointing payrolls report for November, which showed growth of 57,000 jobs, which economists say maybe too week to sustain the pace of economic activity.
Sung Won Sohn at Wells Fargo Bank said recovery is for real, but that more patience is need to see it
"Although the overall [job] gains were much less than expected, the economy has added 328,000 jobs in the last four months," he said.
"The labor market is heading in the right direction. Rising demand is leading to increased corporate profits, which will translate into more jobs in the coming months."
Investors are setting their sights on the 10,000 mark for the Dow to cap a healthy year for Wall Street after a horrendous streak over the past three year,
"The Santa Claus rally is not supposed to come until the final week of December, but the month has certainly begun with holiday cheer," said Larry Wachtel at Prudential Securities.
But Wachtel and other worry that the market may have trouble overcoming the resistance to the psychological barriers of Dow 10,000 and NASDAQ 2,000, exemplified by the selloff on the NASDAQ.
Summit Analytic Partners technical analyst Richard Williams went as far as saying the market's current technical makeup suggests the recent rally "may well have ended or will end very soon."
The rally may be running out of steam after a nine-month rally that has pushed the broad market up by some 30 percent, with a 50 percent gain for the NASDAQ.
"The stock market's major averages have been pushing their way to
multi-month highs, but their progress seems to lack conviction," said Steven Narker, director of global private client research at Merrill Lynch.
"That's not surprising, because many investors are locking-in some of the profits that they have recorded in 2003.
Some hesitation now may be a prelude to a deeper correction in the weeks ahead. If one develops, investors shouldnt be caught off-guard. We suggest that they view a setback as a base for another upleg of the cyclical bull market that should extend into 2004."
Alfred Goldman at AG Edwards is still counting on a Santa Claus rally, saying the seasonal trend and underlying economics are helping Wall Street.
"We are in the best month of the year [for stocks] and the fundamentals are supportive of a higher market," he said.
Bonds firmed slightly, with investors cautious ahead of Tuesday's meeting of the Federal Reserve. The yield on the 10-year US Treasury bond eased to 4.215 percent from 4.320 percent a week earlier and that on the 30-year bond to 5.047 percent from 5.126 percent. Bond yields and prices move in opposite directions.