Wall Street prepares to close out the year on an upbeat note with the market holding hefty gains from a stunning comeback following a disastrous start to the year.
The stock market enters the final week of trading at its highs for the year on the heels of a stunning nine-month rally that lifted the main indexes from their lowest levels in over a decade.
The final four trading days of the year in the upcoming holiday-shortened week are expected to see light activity and a favorable mood, with the market enjoying a so-called Santa Claus rally.
In the holiday week ending on Thursday, the Dow Jones Industrial Average climbed 1.85 percent to 10,520.10, its best level in nearly 15 months.
The tech-rich NASDAQ composite meanwhile rallied 3.35 percent to 2285.69 and the broad Standard & Poor’s 500 index advanced 2.18 percent to 1,126.48.
Fred Dickson, market strategist at DA Davidson & Co, said the mood on Wall Street should remain positive through the coming week.
“Trading activity should pick up next week as investors make last minute portfolio changes like tax-loss sales and portfolio rebalancing,” he said. “We still expect to see the minor Santa Claus rally continue through New Year’s Eve.”
Some said the upbeat mood was helped by a steepening of the yield curve — or a rise in the difference between short-term and long-term bond rates. Analysts say this is a positive sign because it encourages lending and risk taking.
The opposite phenomenon, an inverted yield curve, suggested recession was coming in 2007.
The yield curve is “a good barometer of the health of the US economy,” said Chris Gaffney at EverBank World Markets, who added that the difference between the short and long bonds rose to a record high in the past week.
With the year almost over, the Dow blue-chip index is sitting on gains for this year of 19.87 percent, with the NASDAQ up 44.94 percent and S&P index ahead 24.71 percent.
Although the market remains well below highs hit in 2007 and is stuck near levels from a decade ago, many traders are satisfied with a positive year.
“The year now ending will be remembered more for what didn’t happen, than what did,” said Peter Buchanan, an economist at CIBC World Markets.
Buchanan said the year opened “with talk of financial and economic Armageddon,” but that a recovery came with surprising speed.
“Few developments have been more striking than the turnaround in equity markets,” he said.
Many analysts say that following the stomach-turning ups and downs over the past months, the stock market may be fairly valued, leaving the possibility of an extension of gains into next year.
“We have made a lot of progress during 2009 and we have a lot more to make,” said John Wilson, equity strategist at Morgan Keegan. “This has been a difficult decade for investors. If history is any example, the next decade should provide a more favorable environment.”
Bonds fell amid a shift to equities in the past week. The yield on the 10-year Treasury bond increased to 3.807 percent from 3.546 percent a week earlier while that on the 30-year bond rose to 4.687 percent from 4.458 percent. Bond yields and prices move in opposite directions.
Tropical Storm Usagi strengthened to a typhoon yesterday morning and remains on track to brush past southeastern Taiwan from tomorrow to Sunday, the Central Weather Administration (CWA) said yesterday. As of 2pm yesterday, the storm was approximately 950km east-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost point, the CWA said. It is expected to enter the Bashi Channel and then turn north, moving into waters southeast of Taiwan, it said. The agency said it could issue a sea warning in the early hours of today and a land warning in the afternoon. As of 2pm yesterday, the storm was moving at
UPDATED FORECAST: The warning covered areas of Pingtung County and Hengchun Peninsula, while a sea warning covering the southern Taiwan Strait was amended The Central Weather Administration (CWA) at 5:30pm yesterday issued a land warning for Typhoon Usagi as the storm approached Taiwan from the south after passing over the Philippines. As of 5pm, Usagi was 420km south-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost tip, with an average radius of 150km, the CWA said. The land warning covered areas of Pingtung County and the Hengchun Peninsula (恆春), and came with an amended sea warning, updating a warning issued yesterday morning to cover the southern part of the Taiwan Strait. No local governments had announced any class or office closures as of press time last night. The typhoon
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
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