The Dow Jones Industrial Average recorded its third consecutive week of gains amid strong economic reports which pushed most of the major averages to new 52-week highs. The big media event occurred on Thursday when the Dow closed over 10,000 for the first time since May 2002. For the week, the Dow shot up 180 points (+1.83%) and closed at 10042. However, it was a different story at the NASDAQ as many big-name tech stocks were under pressure for most of the period. On Tuesday, the NASDAQ fell below its 50-day moving average but a 37 point surge on Thursday saw the index close above this important support area. For the week the NASDAQ gained 12 points (+0.62%) to close at 1949.
Early Monday, traders bid up stocks across the board on word that Saddam Hussein had been captured; however, much of the gains were erased by early afternoon as it became apparent that Saddam wouldn’t be spending his looted billions at Wal-Mart this Christmas season, as had been rumored earlier. Low volume has led to narrow trading ranges, a trend expected to continue through the end of the year. For the week ending December 10, 2003 U.S. equity mutual funds had inflows of $1.8 billion compared to inflows of $2.6 billion the previous week.
THE COMPASS PORTFOLIOS
No changes once again. Slow and steady progress continues amid year-end window dressing on the part of equity mutual funds. Most market indicators have improved to near-normal levels from those reflecting mild deterioration a week earlier. No portfolio adjustments are prescribed at the current time, and it appears likely that we will continue with the same posture through year-end.
The dollar hit another record low versus the euro Monday after President Bush reiterated his support for a strong-dollar policy and said his administration expects the financial markets to set the level for the U.S. currency. President Bush stated in a news conference Monday that “Part of the economic policy of this administration is a strong dollar policy. We fully expect markets to set the dollar. But we have a strong dollar policy, which is, in our judgment, good for the economic vitality of this country,”
Recent polling data shows a slight slump in consumer confidence statistics. The University of Michigan’s preliminary consumer sentiment index for December fell to 89.6 from 93.7 in November, according to market sources quoted by Reuters. Economists, on average, expected a reading of 96, according to Briefing.com. The university’s current conditions index, which measures the way consumers feel about the present state of the economy, fell to 93.6 from 102.5 in November. The expectations index, measuring consumer’s hopes for the near future, fell to 87.1 from 88.1 in November.
Lastly, oil prices jumped to $33 a barrel Friday on forecasts for cold weather, which also helped send natural gas futures sharply higher above the key $7 level, traders said. Crude oil for January delivery rose $1.15 a barrel and later backed off a bit to trade $1.10 higher at $32.95 a barrel. Natural gas jumped 46.5 cents to $7.08 per million British thermal units. A BTU is a measure of energy.