Ford cheers but low home sales concern
THE S&P 500 and the Nasdaq rose yesterday as better-than-expected factory orders and a surge in vehicle sales at Ford provided more evidence of an economic recovery.
But a big decline in pending home sales, which fell in November for the first time in nine months, increased concerns about the housing market, capping the broad market’s gains and pushing the Dow industrials into the red a day after all three major US stock indexes finished the first trading day of 2010 at the highest levels in over a year.
For the last month, stocks have surged as investors bet on a series of better-than-expected economic data. Much of that optimism appeared to remain intact yesterday as S&P indexes for the financial, materials and energy sectors ended the day higher.
Yesterday marked a new 15-month high for the S&P 500 and a 16-month high for the Nasdaq.
“There is nothing in here to suggest that investors are backing away at all from the sentiment expressed yesterday, which is one of increased optimism about the global recovery,” said Craig Peckham, equity trading strategist at Jefferies & Company.
Peckham pointed to what he termed a “slow and measured march higher” in expectations for a better reading in Friday’s non-farm payrolls report.
The Dow Jones industrial average fell 11.94 points, or 0.11 per cent, to end at 10,572.02. The Standard & Poor’s 500 Index rose 3.53 points, or 0.31 per cent, to finish at 1,136.52. The Nasdaq Composite Index crept up just 0.29 of a point, or 0.01 per cent, to close at 2,308.71.
Ford surged 6.6 per cent to $10.96, hitting a four-and-a-half year high after it said its December sales rose 33 per cent year-over-year, ending a tumultuous 12 months when rivals GM and Chrysler collapsed into bankruptcy
Earlier yesterday, the government said US factory orders rose more than expected in November. The report, which suggested the manufacturing sector will continue to support a recovery, was released one day after the Institute for Supply Management’s index of manufacturing activity beat estimates.
Financials, energy, materials and consumer discretionary stocks gave the biggest boosts to the S&P 500 in a muted rerun of Monday’s rally.
The S&P financial index led the wider market higher, rising 1.6 percent, with Citigroup up 4.4 per cent to $3.55.
Pending home sales from the National Association of Realtors fell 16 per cent in ovember compared with expectations of a 2 per cent drop.