Sun, Nov 25, 2012 - Page 15 News List

US stocks snap six-week slide

THANKSGIVING:Markets advanced as consumers flocked to stores in search of bargains, diverting investors’ focus from the US’ fiscal debt problem

AFP, NEW YORK

Trader Frank Masiello executes trades as Ella Scully watches on the floor of the New York Stock Exchange on Friday. The day after the Thanksgiving holiday, traders at the New York Stock Exchange usually bring their kids to work.

Photo: Reuters

US stocks solidly snapped a six-week slide on Friday with gains topping 3 percent, the best rise in five months.

In the holiday-shortened week, the Dow Jones Industrial Average jumped 3.35 percent in four trading sessions to finish on Friday at 13,009.68 points.

The tech-rich NASDAQ leaped 3.99 percent to 2,966.85, and the Standard & Poor’s 500 index, a broad measure of the markets, gained 3.62 percent at 1,409.15.

The Thanksgiving Day holiday that shuttered US markets on Thursday and shortened the session on Friday also gave a break to the US Congress ahead of negotiations with the White House on the fiscal budget.

Unless US President Barack Obama and Democratic and Republican lawmakers can reach a compromise to avoid the fiscal cliff in January, the severe mandatory spending cuts and tax increases were predicted to tip the country back into recession.

“US stocks rallied this shortened trading week as optimism grew that a deal to avoid the fiscal cliff could be reached,” IHS Global Insight economists Paul Edelstein and Nigel Gault said.

The week featured housing data that pointed to a recovery finally gaining traction in the depressed sector more than six years after the market crashed.

US Federal Reserve Chairman Ben Bernanke, in a speech on Tuesday to the Economic Club of New York, warned that the looming fiscal cliff posed a “substantial threat” to US economic recovery.

On Friday, stocks rallied sharply as consumers thronged to stores hunting for bargains on Black Friday, the traditional start of the year-end holiday shopping season. Consumer spending drives about 70 percent of the economy’s activity.

Consumers “seem enthusiastic enough” according to the latest numbers on household confidence, Gregori Volokhine at Meeschaert New York said.

“Next week congress gets back in session, President Obama will be back in the White House [and] many people will be watching whether there is any development on the fiscal cliff talks,” Andrew Fitzpatrick at Hinsdale Associates said.

In the week ahead, investors will keep an eye on a meeting of eurozone finance ministers and other creditors of debt-ravaged Greece tomorrow to see whether Athens will finally get its much-delayed installment of bailout aid.

“That will be something important for Wall Street to study — the sentiment is that work will get done on Monday,” Fitzpatrick said.

The rest of the week will be packed with indicators because it is the last week of the month and will include data postponed by the Thanksgiving holiday, FTN Financial analysts said.

Among them will be durable goods orders and consumer confidence on Tuesday, and the Fed’s Beige Book report on economic conditions on Wednesday.

On Thursday, the government will publish its second estimate of third-quarter GDP growth and weekly unemployment claims. Personal income and spending data will be released on Friday.

Volokhine said all of the indicators should be viewed with caution because “they are very influenced by Hurricane Sandy,” the disastrous superstorm that struck the northeast late last month to early this month.

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