Encouraging holiday season sales numbers and labor data helped the Dow and S&P 500 continue their record run on Thursday. Initial claims dropped for the week ending Dec 21 and holidays sales were reported to have improved between Nov 1 and Dec 24 period. Positive holiday sales numbers lifted the retail sector into the green and was among the major gainers.
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The Dow Jones Industrial Average gained 0.8% to end at a record high of 16,479.88. The Standard & Poor 500 (S&P 500) too notched up a record high of 1,842.02, up 0.5%. The tech-laden Nasdaq Composite Index added 0.3% to close yesterday’s trading session at 4,167.18. The fear-gauge CBOE Volatility Index dropped 1.2% to 12.33. As expected volumes remained low at 3.3 billion shares being traded on the exchanges, as against monthly average so far of 6.2 billion. The advancers outpaced the decliners as for 51% stocks that gained on NYSE, 46% ended in the red.
Boxing Day had enough encouragement for the traders as holiday sales were reported to be positive. According to MasterCard Advisors SpendingPulse, sales during Nov 1 to Dec 24 improved 2.3% year on year. The rate of increase was a significant jump from 0.7% increase reported last year. In fact, this year’s sales increase is the best in three years.
SpendingPulse records the level of purchases of jewelry, luxury and home furniture & furnishing, apparel, and electronics segments in the holiday period. The positive data boosted the retail stocks and the Consumer Discretionary SPDR (XLY) gained 0.7%. Among the retail stocks, J.C. Penney Company, Inc. (NYSE:JCP), Macy's, Inc. (NYSE:M), Target Corporation (NYSE:TGT), Coach, Inc. (NYSE:COH), Sears Holdings Corp (NASDAQ:SHLD) and Wal-Mart Stores, Inc. (NYSE:WMT) gained 2.5%, 0.2%, 1.3%, 0.3%, 1% and 0.5%, respectively.
The positive sales numbers by MasterCard Advisors SpendingPulse comes as a breather after the National Retail Federation (NRF) had reported in a survey from Prosper Insights & Analytics that Thanksgiving weekend sales had decline. According to the report, sales during the period declined 2.7% to $57.4 billion from $59.1 billion in the year-ago period.
Aditionally, initials claims data was a big boost for investor sentiment. The U.S. Department of Labor noted that seasonally adjusted initial claims dropped 42,000 to 338,000 in the week ending Dec 21. The 4-week moving average increased 4,250 from the prior week to 348,000.
These reports were enough for the benchmarks to extend their record run. The Dow is having its longest winning streak since March and the record finish yesterday marked its sixth consecutive close at a record high. In fact, the Dow has recorded new highs 50 times this year out of 249 sessions. The S&P 500 too had its share of laurels, recording new highs 44 times this year.
The positive numbers yesterday follow a host of encouraging economic reports released on Tuesday. The U.S. Census Bureau had noted that new orders for manufactured durable goods jumped 3.5% in November to $241.6 billion. The jump comfortably outperformed the consensus estimate of a 1.9% gain and also rebounded from a 0.7% decline in October. Moreover, core capital goods order jumped 4.5% in November, the highest since January.
According to a joint release by the U.S. Census Bureau and the Department of Housing and Urban Development noted that sales of new single-family houses dropped 2.1% from the revised October rate of 474,000 to a seasonally adjusted rate of 464,000 in November. Nonetheless, the figure was 16.6% above Nov 2012 figures and also outpaced the consensus estimate of a drop to 440,000. Investor sentiment was also boosted by the fact that the government revised last three months’ new home sales figure upwards.
Read the analyst report on JCP
Read the analyst report on M
Read the analyst report on TGT
Read the analyst report on COH
Read the analyst report on SHLD
Read the analyst report on WMT
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