While you were sleeping: Stocks edged higher

Friday 25th December 2009

Signs of continuing strength in the U.S. economy helped propel shares higher in the U.S. and Europe in shortened trading sessions ahead of Christmas.

Shortly before the 1pm early close in New York, the Dow Jones Industrial Average was up 0.42%, the Standard & Poor’s 500 Index gained 0.42% and the Nasdaq Composite Index advanced 0.62%.

In Europe, the FTSE 100 rose 0.56% and France’s CAC closed up 0.05%. The Dow Jones Stoxx 600 Index didn’t trade on Thursday. Most European markets were closed on Thursday and would remain so on Friday. The FTSE 100 will also be closed on Monday.

Advancers in London were led by miners on stronger commodities prices. Fresnillo, Rio Tinto Group and BHP Billiton gained.

Investors confident that the rally will continue in the New Year received a positive confirmation from the founder of Birinyi Associates.

“I see a basic continuation of what we have seen for the last nine months,” Laszlo Birinyi, the founder of the Westport, Connecticut-based research and money-management firm told Bloomberg Television. “There’s going to be a drift back to stocks because people are realizing alternatives aren’t happening and the negative case isn’t all that compelling.”

Most of the investors still trading today were focused on the latest two economic reports out of the U.S.

The Commerce Department today reported that orders for durable goods, or those meant to last for several years, exceeded expectations last month. Orders, excluding those for transportation, rose 2% in November, compared with a 0.7% drop in October. Economists had forecast a 1% advance.

Separately, the U.S. Labor Department released the latest weekly claims for jobless benefits which fell to their lowest since early September 2008. Claims slid by 28,000 to 452,000 last week. Economists were looking for 470,000 claims.

Today’s economic data adds to the optimism provided by the 0.5% rise in consumer spending reported on Tuesday.

Treasury Secretary Timothy Geithner this week said the economy was “growing, getting stronger and I think most people would say the economy is strengthening into the year end”.

There is a consensus building that 2010 will be a far better year for the economy, though the Federal Reserve is trying to keep optimism in check.

In its latest statement on the economy, released on December 16, the Fed’s key policy-making committee said economic activity was picking up and the deterioration in the labour market was abating. It also said there was still ample slack in the economy to contain inflation.

The U.S. dollar was little changed at 91.69 yen at 10.35am in New York, after earlier dropping as much as 0.6%. The euro increased 0.3% to 131.78 yen, from 131.38. The dollar slid 0.3% to US$1.4373 per euro, from US$1.4337.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.13% to 77.83.

Benchmark 10-year U.S. Treasury notes were trading 10/32 lower in price to yield 3.80%, up from 3.76% late on Wednesday. The notes were on track for the worst weekly performance in four weeks and the worst monthly performance since January.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, rose 0.41% to 280.50.

U.S. crude oil futures were up 47 cents at US$77.14 a barrel. ICE Brent crude futures rose 42 cents to US$75.87. The increases were linked to a U.S. government report on Wednesday which pointed to a larger than expected dop in U.S. crude inventories last week.

Spot gold was at US$1099.55 an ounce by 1330 GMT, versus US$1087 an ounce late in New York on Wednesday. Bullion tumbled to a seven-week low of US$1074.10 an ounce earlier this week.

Businesswire.co.nz

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