While you were sleeping: Stocks mixed, Gains ahead

Wednesday 30th December 2009

Stocks edged higher in Europe led by miners, while they were mixed on Wall Street in thin trading.

At midday in New York, the Dow Jones Industrial Average was up 0.11%. The Standard & Poor’s 500 Index slid 0.04% and the Nasdaq Composite Index declined 0.12%.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 0.05% to 19.92.

The Dow Jones Stoxx 600 rose 0.1% to 253.53, extending its longest winning streak since September 11. The index is heading for its biggest annual gain since 1999, having risen 28% this year.

National benchmark indexes gained in 15 of the 18 western European markets. The U.K.’s FTSE 100 Index increased 0.4%, France’s CAC 40 was 0.2% higher and Germany’s DAX was flat.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.16% to 284.00.

U.S. crude for February delivery rose 7 cents to US$78.84 a barrel, after gains in the dollar sent crude off earlier highs of US$79.39 a barrel. London Brent crude for February traded up 26 cents to US$77.58 a barrel.

On the economic front, several reports showed that the U.S. economy is continuing to heal though the process is uneven.

The S&P/Case-Shiller home-price index increased 0.4% from the prior month on a seasonally adjusted basis, after a 0.2% rise in September, the group said in New York.

The Conference Board’s confidence index increased to 52.9, in line with the median forecast of economists surveyed by Bloomberg News, from 50.6 in November, the New York-based research group said.

U.S. retail sales climbed during Christmas week as shoppers sought last-minute gifts, a trade group said. Sales at stores open at least a year climbed 2.3% in the week ended December 26 from a year ago, the International Council of Shopping Centers and Goldman Sachs Group Inc. said.

The U.S. dollar increased 0.4% to 91.99 yen, from 91.63 yesterday. It touched 92.03, the highest level since October 27. The dollar appreciated 0.2% to US$1.4348 per euro, from US$1.4378. The euro climbed 0.2% to 131.97 yen, from 131.76.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.16% to 77.80.

Futures trading in Chicago showed a 60% chance that the U.S. central bank would increase its key lending rate in June, up fromm 48% odds a week earlier

Ten-year U.S. yields reached 3.86%, the highest level since August 10. The Treasury’s sale of US$44 billion in two- year notes Monday drew a yield of 1.089%, the highest since August. The department plans to sell US$42 billion of five- year notes today and US$32 billion of seven-year debt tomorrow.

The yield premium of 10-year Treasury notes over similar- maturity Japanese bonds reached 2.54 percentage points today, the highest level since December 2007 based on closing prices, according to Bloomberg. The wider the difference, the more appealing U.S. debt is compared with Japan.

Barton Biggs and Marc Faber, who recommended buying stocks in, are predicting more gains for both U.S. stocks and the U.S. dollar. The investors made the comments in separate interviews on Bloomberg TV.

Shares in the largest equity market and the U.S. currency may add 10% as economies improve around the world, Biggs of New York-based hedge-fund firm Traxis Partners LP said in a Bloomberg Television interview Mondday.

Faber, publisher of the “Gloom Boom & Doom” newsletter, told Bloomberg TV that the dollar may rise 5% to 10% against the euro while stocks gain, reversing the inverse relationship that existed between March and November.

Businesswire.co.nz

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