The recent drop in oil prices to four month lows coupled with Microsoft’s $32.62 billion dividend helped push most of the major indexes to new 52-week highs. The S&P 500 closed at 1191.37 on Wednesday which was the highest the index has been since August of 2001. The gains were confirmed by strong volume on both the NYSE and the NASDAQ and the highest number of NYSE new highs (468) since January. Aided by last Wednesday’s 162 point surge, the Dow Jones Industrial Average gained 70 points (+0.60%) for the week and closed at 10592.
On Friday, the NASDAQ traded above its previous closing high for the year as Intel and the internet and biotech stocks led the charge. For the week, the index gained 46 points (+2.20%) and closed at 2147.
Momentum indicators continue to be strong, reflecting the strong upward move in the markets over the past six weeks. The number of NYSE stocks recording new 52-week highs continues to be impressive. Mutual fund inflows continued its surge, adding an additional $3.4 billion (week ending 12/1) compared to $1.2 billion of inflows the previous week.
THE COMPASS PORTFOLIOS
Our bullish allocations remain in place, with portfolios sporting the bare minimum exposure to cash at the current time. While the markets have hit a bit of headwind over the past week, the normal ebb and flow of the markets offers us no compelling reason to reduce equity exposure at this time. Institutional support for equities continues to be strong, and our allocations appear sustainable heading into the end of the year. Year-end tax loss selling should be nonexistent, as most (if not all) portfolio positions are showing gains at the present time. As we head into 2005, we remain committed to exposing client assets only to reasonable and measured risks, and expect that doing so will continue to reward our clients handsomely. Risk management continues to be the single most important task we endeavor to undertake, and we continue to believe that positioning client assets appropriately for the current market environment is the key to positive investment results.
U.S. food prices will rise by as much as 4 percent this year, the biggest increase in 14 years, due to more costly beef, milk and fresh vegetables, the U.S. Agriculture Department said Monday. By comparison, food price inflation was 2.2 percent in 2003 and 1.8 percent in 2002. A big factor in this year’s food price increase is the price of beef, which soared by as much as 11 percent, due partly to consumers adopting a higher protein diet. Milk, dairy products and eggs rose by as much as 8 percent, the USDA said. Vegetarians were not immune to inflationary pressures, as the price of fresh produce rose by as much as 4 percent in 2004. Price increases were due largely to the string of hurricanes that hit Florida in September and torrential downpours in California in mid-October. Retail tomato prices briefly tripled, but are now easing as a new crop is harvested.
In what may be a scrap of good news for the so-far lackluster holiday shopping season, consumer confidence held steady this week after tumbling the week prior, according to a new poll. The ABC News/Money magazine Consumer Comfort Index stands at -8 on its scale of +100 to -100, essentially the same as last week’s -9. Last week however, the -9, but much better than its average of -19 last year.index fell from -4 to -9, one of the steepest declines in its 19 year history. The index has averaged -11 this year, just slightly below its long-term average,