YAHOO
[BRIEFING.COM] : Stocks opened sharply lower following a barrage of economic
reports that painted an overall weak picture of the economic environment, but
buying interest in tech and automaker stocks helped reverse sentiment, sending
stocks to their fourth consecutive gain.
In the end,
the S&P 500 surged 3.5%, marking a 19.7% gain from its multi-year low
reached on Friday. All ten sectors
advanced, with notable strength in consumer discretionary stocks as automakers
spiked 31% on speculation that a bailout agreement may be reached next
week. The tech sector (+4.2%) also
sported solid gains. Defensive-oriented
consumer staples (+1.4%), utilities (+0.5%) and healthcare (+1.2%)
underperformed on a relative basis
In economic
news, October personal spending dropped 1.0% month-over-month, which met
estimates, although it will set a negative tone for fourth quarter earnings
estimates. Income was up 0.3%, and the real PCE deflator, an inflation measure,
dropped 0.6%, reflecting the sharp drop in energy prices.
The housing
industry continues to show weakness as new home sales drop to the lowest level
since 1991. The high supply of homes at current sales rates indicate a recovery
is going to take time. The number of new home sales in October dropped 5.3%
month-over-month to a seasonally-adjusted annual rate of 433,000, which was
worse than the expected reading of 441,000. New home sales are down 40% from
last year and down 69% from the all-time high reached in July 2005. The median
sales price declined 1.7% month-over-month to $218,000 and the month's supply
of homes for sale at 11.1 is the fifth highest on record.
Despite the
dour housing data, homebuilders rose 13.6%.
The Fedā€™s $600 billion plan to support housing lending
spurred a drop in the average 30-year fixed mortgage rate to 5.81% from 5.98%,
according to BankRate.com, which gave a lift to housing related stocks.
The number of
new unemployment claims dropped 14,000 to 529,000 for the week ended Nov. 22.
Although this was slightly better than the expected reading of 535,000, it
still represents a very weak labor market.
In other
economic news, October durable goods orders plunged by a larger-than-expected
amount, Chicago manufacturing in November contracted the most since 1982
according to a regional survey, and consumer confidence dropped to a 28 year
low in November, according to the University of Michigan.
In corporate
news, Tiffany (TIF
20.86, +0.03) reported higher-than-expected third quarter earnings, but cut its
full year earnings guidance to below expectations. Deere (DE 35.62, +2.52) reported a 14% drop in
earnings per share and said the outlook for the year ahead is highly uncertain.
Oil futures
had a volatile session. Prices eventually rose 7.6% to $54.62 per barrel
despite a larger-than-expected increase in both crude and gasoline stockpiles.
In overseas
news,
As a reminder,