U.S. Stocks Head Toward Record on Year’s Last Trading Day

31 Dec 2014 | Author: | No comments yet »

Dow on pace to end year back over 18,000 as stocks rise.

The Standard & Poor’s 500 Index rose 0.2 percent to 2,085.03 at 11 a.m. in New York. Stocks pushed higher on the final trading day of the year, capping another strong year for stocks that puts the Dow on track to post its sixth consecutive year of gains.

Wednesday, 14:30 GMT: The S&P 500 is heading back towards its record high at the start of the last session of what has been a stellar year for US equities, after European indices headed up off their October lows and cut their overall losses for 2014. The Wall Street benchmark is up 0.1 per cent at 2,082.20 turning around from its 0.4 per cent fall on Tuesday and putting it back within touching distance of its best-ever closing reading of 2,090.57 reached on Monday. Stocks shrugged off an early report from the Labor Department showing jobless claims rose by more than expected, up 17,000 to 298,000 in the week ended Dec. 27.

The extended period of cheap money, coinciding with a strong economic rebound and contained inflation, has sparked a bull-run in equities at the same time as a sustained dollar rally over 2014. The year’s gains have been driven largely by improving corporate earnings, steady improvements to the U.S. economy and a still-accommodative Federal Reserve, even as it is widely expected to begin raising interest rates in mid-2015. The benchmark overcame five separate declines of 4 percent or more in 2014, while stocks have never once declined more than three straight times, a first in data compiled by Bloomberg going back to 2000. The index continued to climb this month, extending its annual advance to 13 percent, as the Federal Reserve pledged to be patient on the timing of interest-rate increases and the world’s largest economy expanded at the fastest pace in more than a decade.

Separate data showed contracts to purchase previously owned homes rose in November as employment gains and low borrowing costs helped bring potential buyers into the market. U.S. stocks will extend their bull market into a seventh year, according to Laszlo Birinyi, whose favorable stock calls since 2009 have mostly come true. The rise trims the main UK index’s loss for the year to 1.5 per cent, but also lifts it 5.8 per cent off its closing low for the year reached in October. The former Salomon Brothers Inc. equity analyst predicted in February that the benchmark gauge would reach 1,900 in the second quarter and said in July it would reach 2,100 by year end.

The nadir came at the height of concern about the potential spread of the Ebola virus, and coincided with weak European economic data that cast doubt on Germany’s ability to continue powering the eurozone economy. Morgan Private Bank, said a slow-and-steady approach to raising rates shouldn’t diminish the appeal for U.S. stocks. “It’s fundamentally good because it means that the Fed is removing this extraordinary easing and they’re only doing that because they feel that the economy is able to generate self-sustaining growth,” he said. “That will be good for corporate earnings,” he added. Utility shares jumped 27 percent, the largest advance, while a rout in oil prices has sent a gauge of energy companies down 10 percent this year, the most since 2008. Despite that, the mainland Chinese equities benchmark remains at about half the level it reached before the financial crisis and remains beneath its 2009 post-crisis high.

Brent crude, the international oil benchmark, is 2.4 per cent weaker at $56.49 a barrel, with pressure coming from further signs of a slowdown in China’s manufacturing sector. The final reading of the HSBC Manufacturing Purchasing Managers’ Index fell to a final reading of 49.6 in December from 50 in November, indicating a contraction in activity. It would still take a brave man to try and catch this particular falling knife though, given how sanguine Saudi Arabia appears to be about recent drops in the oil price, which would seem to suggest we could see further losses towards the lows seen a few years ago near $40 a barrel.” The dollar DXY, +0.15% was little changed, keeping its yearly advance of more than 12% and on track for its best year since 2005, according to FactSet data. Shares of American Eagle Energy Corp. plunged 20% after announcing Wednesday that it suspended drilling operations and likely won’t resume until oil prices improve.

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