Back in the Black
Despite quiet trading and a holiday-shortened week, the S&P 500 and the Nasdaq finished last week at all-time highs, with all three main domestic benchmarks (including the Dow, which closed less than one-half a percentage point off its all-time high) booking their first weekly gains in three weeks. Seven of the 11 main sectors of the S&P closed in positive territory. Tech and materials shares led gains, while telecoms lagged. Meanwhile, the Russell 2000 index, the benchmark gauge of small companies, also closed at a record and up 0.3 percent for the week.
General Electric shares climbed modestly on Friday, up 0.3 percent, after a Securities and Exchange Commission filing reported that board member James Tisch bought three million shares worth $53.7 million late Wednesday. That comes on the heels of purchases of a total about $2 million in stock by the company’s new chief executive, John Flannery, and board member Francisco D’Souza, over the past week. GE shares closed at a 6 ½-year low on Tuesday amid disappointment over the conglomerate’s turnaround plan and have lost 42 percent of their market value since the start of the year.
On the data front, a survey of purchasing managers showed that businesses grew in November at the slowest pace in four months. A report on strong existing home sales in October appeared to be partly responsible for the market’s strong rise on Tuesday. Weekly jobless claims also remained near historic lows, but October durable goods orders declined 1.2 percent for the month, falling well short of consensus estimates for a small gain.
The minutes from the Federal Reserve’s October 31-November 1 policy meeting, released on Wednesday afternoon, were generally interpreted as dovish, with several Fed officials expressing concern about the persistence of below-target inflation. The Fed minutes and the durable goods data helped reverse a small rise in longer-term Treasury yields earlier in the week and pushed bonds into positive territory for the week as well.
European stocks also ended higher last week, although markets there teetered after German preliminary coalition talks collapsed over the previous weekend. Currency markets had limited data to trade on, and the U.S. dollar touched a five-week low versus the euro. In Asia , stocks moved mostly higher as well, with China’s Shanghai Composite stabilizing after a notable losing streak.
U.S. oil futures settled at more than two-year highs ahead of an important meeting of producers. Energy stocks saw good gains following the shutdown of imports from the TransCanada Keystone pipeline. The closure of the pipeline following a leak in South Dakota is expected to reduce deliveries to the U.S. by around 85 percent through the end of the month. The ICE U.S. Dollar Index fell and gold futures ended modestly lower.