Daily Market Reports | Nov 27 2008
By Greg Peel
The Dow closed up 247 points or 2.9% while the S&P was up 3.5% and the Nasdaq 4.6%.
It was an unusual session in the context, given Wall Street did little more than open lower on weak economic data and then rise steadily through the day to close on its high. Remember when markets used to do that? It was the last day before Thanksgiving, and the last full session for the end of the month. Wall Street is closed tonight and Friday night is only a half-day session. Last night was thus the session to square for the month. Volume was light.
It was the fourth consecutive up-day, and that hasn’t happened since the last bear market rally in May. Bear market rallies are also known as “sucker’s” rallies but as the holiday season begins in earnest the feeling is the beaten down bulls “deserve” a bit of Christmas cheer. The first expectation of any bear market rally is usually for a 20% move, and last night the S&P 500 closed up 19% – from Friday. You don’t want to blink in this market. However bear market rallies can also be a lot more substantial.
Which might be something to give thanks for, especially considering November closed (if you don’t count Friday’s half session) down 8% in the S&P. It’s more likely to be pressed turkey sandwiches rather than the ten pound bird this year.
There was a litany of miserable economic data released last night, which provided for early weakness but was immediately shrugged off as yesterday’s news. They are as follows (with their “worst since” numbers in brackets):
October durable goods orders fell 6.2% (2 years). Economists were expecting a fall of 2.5%. October consumer spending fell 1% (September 2001). Weekly jobless claims fell slightly but the rolling monthly average increased to a high of 529,000 (25 years). October new home sales fell 5.3% to 433,000 (1991). November consumer sentiment fell to 55.3 (April, and before that May 1980).
Forgeddaboudit.
But there is good news. The October new home sales figure represented a 40% fall year-on-year but the inventory of new homes for sale fell a record 8% for the month. Inventories have now fallen 26% year-on-year and that’s also the biggest fall on record (records began in 1963). While sales of new homes have been slow, no one has been building new homes for months. Eventually this will put a floor under prices.
Except when you remember existing home sales.
The European Union joined in the global stimulus package spending spree last night by committing 200 billion euros to the cause. That was always on the cards, so Europe and the UK took a breather after strong gains this week.
Wall Street’s rally was not impeded by news of deadly coordinated terrorist attacks in Mumbai overnight, the death toll for which is still rising. However the oil pit gave a nod to the devastation in its US$3.67 rally to US$54.44/bbl.
The US dollar traded slightly higher last night, so gold gave back US$8.80 to US$810.90/oz. The Aussie was again relatively steady at US$0.6541.
London base metals were mildly stronger in general, with copper the star up 3%.
The SPI Overnight added 126 points or 3.5% in another attempt to be enthusiastic. That market obviously didn’t factor in the Rio story on Tuesday night.
Happy Thanksgiving to our US readers and local ex-pats. Barring anything untoward, there will be no Overnight Report tomorrow and only a brief wrap on Saturday morning.
