Stocks Finish Near Session Highs as Boehner Still Sees Deal Possible

Market Summary

Wall Street made a red to green move in trading Thursday following renewed optimism by House Speaker John Boehner that a deal will get done. It was a nice way to get equities back on the winning track, making it three winning sessions out of four on the week. It was a data heavy session, with jobless claims coming in line with expectations. The good news came out of housing, with existing home sales surging. In addition, the final 3Q GDP number broke the 3% mark, tallying a 3.1% annualized real rate. That was the first reading above the 3% mark of 2012. Financials led the blue chips higher, which included Bank of America Corp. (BAC) and J.P. Morgan Chase & Co. (JPM). The Dow Jones Industrial Average rose 59.75 points, or 0.5%, to end at 13,311.72. The S&P 500 index climbed 7.88 points, or 0.6%, to 1,443.69, with financials leading gains among its 10 major industry groups. The technology-heavy Nasdaq Composite index added 6.02 points, or 0.2%, to 3,050.39.

Crude for February delivery rose 15 cents, or 0.2%, to $90.13 a barrel on the New York Mercantile Exchange, moving higher alongside equities. Clearly there would be a demand problem if we went over the cliff. Gold fell $21.80, or 1.3%, to $1,645.90 an ounce, while silver tumbled $1.44, or 4.6%, to $29.68 an ounce for its lowest close in nearly four months.

Economic Rundown

Despite it being a backward indicator, it was still nice to see improved economic growth. Real GDP growth for the third quarter was revised up to 3.1 percent annualized, compared to the second estimate of 2.7 percent annualized and to the advance estimate of 2.0 percent. Second quarter growth was a meager 1.3 percent. The latest number topped market expectations for a 2.8 percent advance. Today’s revision puts the economy in a little better position for continuing growth-assuming the fiscal cliff issue is resolved.

Initial claims continued their volatile trend, moving 17,000 higher in the December 15 week to 361,000 following a revised 27,000 decline in the December 8 week. Hopefully we will get back to a more normalized level post-Sandy and holidays. It will be interesting if this volatility is reflected in the December Employment Situation.

Existing home sales spiked 5.9 percent in November to a 5.04 million annual rate that beats even the high-end of consensus estimates. Supply fell sharply, to 4.8 months at the current sales rate from 5.3 months in October which was already a multi-year low. The number of existing homes on the market, at 2.03 million, is the lowest since 2001. The median price, getting a boost from higher priced homes, rose 2.1 percent in the month to $180,600. The year-on-year gain, at 10.1 percent, is in double digits for a second month in a row.

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