Closing Wrap-Up, Nov. 24

Stocks see mild declines in quiet session for the major market indices. The Dow (^DJI) lost 17.24 points to a level of 10,433.71. The S&P 500 (^SPX) declined just 0.59 points to 1,105.65. The Nasdaq (^IXIC) fell 6.83 points to 2,169.18. As expected, volume figures were light with the NYSE trading 951.1 million shares and the Naz turning over 1.88 billion shares. Market breadth was negative by a 14-to-16 and 11-to-16 margin on the Big Board and Naz respectively.

Economic news was the focus Tuesday with several reports released today. The first revision to third quarter GDP was released with the growth figure lowered to 2.8 percent from the initial 3.5 percent announced. However, this was expected, though the decline in the GDP price index to growth of 0.5 percent from 0.8 percent was not. The focus of the report was the decline in final sales, which came in at an annualized rate of 1.9 percent, down from 2.5 percent. This shows that demand was not as strong as initially believed.

Positive news surfaced from the FOMC minutes, which helped bring stocks off their intraday lows. The committee raised its 2010 forecast for the economy with members becoming more and more optimistic about the recovery. However, this doesn't mean rates will be raised anytime soon as the committee noted that employment and inflation aren't expected to pick up any time soon.

The housing sector is another concern for the Fed and traders got two reports on housing prices this morning. The Case-Shiller report showed a 0.4 percent rise in the Composite 10 index, putting the year on year decline at 8.5 percent, better than the double digit percentage losses seen in August. For the past two quarters, home prices have gained 3.1 percent, showing that the worst is over for the sector. Nonetheless, a full recovery is still a ways off and this is why the government extended the first time home buyer credit. This news didn't help home builders with KB Homes (KBH) down 2 percent and Beazer Homes (BZH) off 0.63 percent.

Earnings reports have died down, but traders did get Hewlett-Packards (HPQ) results last night. HP shares fell 1.63 percent despite matching expectations. The company had preannounced several weeks ago and this is when the stock benefited from the news. HP is optimistic about the future, but continues to feel that conditions are tough. The computer maker saw an increase in units sold, but this came at the expense of margins with revenues falling 8 percent. HP shares closed the session at $50.19 and are still nearly twice their 52-week low.

Though volumes are expected to be very light Wednesday as traders take off for the Thanksgiving holiday; there will be plenty of economic news to influence trading. Data on durable goods orders, personal incomes, consumer sentiment and jobless claims are all on tap. With volumes low, this could result in some intraday volatility.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site