US stocks eke out little gains after early drop

Stocks end near the unchanged mark for the week

US stocks ended near the unchanged mark for the week that ended on Friday, 19 November 2010. While the Ireland story remained the headliner for the week, traders also remained focused regarding latest developments from China where the country was expected to take active steps to curb inflation. Economic reports for the week checked in mixed in nature. New IPO from General Motors was another event for the week.



For the week, that ended on Friday, 19 November 2010, Dow ended higher by 10.97 points (0.1%) at 11,203.55. Nasdaq ended marginally lower at 2,518.12. S&P 500 ended almost unchanged at 1,199.73. Five out of ten economic sectors ended lower and five ended modestly higher.

During the week, General Motors returned to the NYSE for the first time in more than a year following its post-restructuring initial public offering. GM garnered an IPO price of $33 per share, but the stock opened trade at about $35 per share before it pulled back.

Quite a few retailers reported earnings during the week. Target, Home Depot, Lowes, Gap – all posted upside earning surprises. BJ's was another retailer whose earning report surpassed expectation. Wal-Mart posted in-line results but provided upside guidance. Sears Holdings however, missed both EPS and revenue estimates. Separately, Dell reported better than expected earnings

Among major economic reports during the week, the Labor Department reported on Thursday that the number of workers who filed new claims for unemployment benefits rose 2,000 last week to 439,000, reflecting little change in nationwide hiring. Market had expected a figure around 442,000. The four-week average of new claims continued to fall and hit its lowest level since September 2008. Continuing claims fell to a near two-year low just below 4.30 million, which is down from the 4.34 million recorded for the prior week.

Among other reports, the Philadelphia Fed Index for November improved to 22.5 from 1.0 in October. Market had expected the reading to improve to just 5.0. Leading Economic Indicators for October increased 0.5%, which is a bit less than the 0.6% increase that had been widely expected after a 0.5% increase in the prior month.

The Commerce Department in US reported on Wednesday, 17 November 2010 that construction of new U.S. homes sank in October to the lowest level in 18 months, but the number of building permits issued rose slightly. Housing starts dropped 11.7% to an annualized rate of 519,000 last month.

On Friday, 19 November 2010, stocks slid to a moderate loss in the early going as participants pared positions following the big gains of the prior session. Despite the weak start, stocks gradually clawed back. They had a hard time pushing past the positive line, but some late buying helped stocks eke out slight gains.

News that China's central increased the reserve requirement for its banks by 50 basis points for the second time in as many weeks unnerved investors. The announcement was not that surprising since speculation has been building that China might tighten policy to fend off inflation. Still, there is concern that tighter policy could slow growth.

On that day, the Dow ended higher by 22.32 points at 11,203.55. Nasdaq ended higher by 3.72 points at 2,518.12. S&P 500 ended higher by 3.04 points at 1199.73. Eight out of ten economic sectors ended higher led by materials, energy, and industrial sectors. Financials and utilities were the only sectors to end in the red.

On Friday, crude oil futures for light sweet crude for December delivery closed lower by $0.44 (0.5%) at $81.98/barrel. For the week, crude lost 4%.

Precious metals ended mixed on Friday, 19 November 2010 at Comex. Gold fell marginally lower while silver rose. Gold for December delivery ended at $1,352.3 an ounce, lower by $0.70 (0.1%) on the New York Mercantile Exchange. During intra day trading, earlier it rose to a high of $1362.9. Gold tried paring all its losses going into close but at the end failed to erase it completely. For the week, gold lost 1%. It was second consecutive weekly loss for gold in four weeks. On Friday, December Comex silver futures ended higher by $0.35 (1.3%) at $27.18. Prices gained 4.8% for the week.

All Indian ADRs ended strictly lower on Friday. Tata Motors and Wipro Tech shed the most losing 2.8% and 2.4% respectively. ICICI Bank and HDFC Bank followed them losing 1.9% and 0.2% respectively.

For the year, Dow, Nasdaq and S&P 500 are higher by 7.5%, 11% and 7.7% respectively.

Looking ahead to next week, participation will likely be a bit more limited than usual, given the Thanksgiving holiday on Thursday and a half day of trade on Friday. Still, there are some important events to follow, including minutes from the latest FOMC meeting, which may give further context for the second round of quantitative easing and some additional perspective on the PCE Deflator number Wednesday. Also on tap for next week are monthly existing home sales figures, the first revision to third quarter GDP, monthly durable goods orders, and monthly data on personal income and spending.