Stock Market News for December 24, 2014 - Market News

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Benchmarks mostly settled in the green on Tuesday banking on better-than-expected revision to third quarter GDP numbers. The Dow closed above the 18K mark for the first time ever and notched up a record closing level for the 36th time this year. Almost 119 trading sessions have gone by since the index had crossed the 17K mark. The S&P 500 also registered a record close for the 51st time in 2014. However, the tech-laden Nasdaq ended in the red, dragged down by declines in bio-tech stocks.

For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article
 
The Dow Jones Industrial Average (DJI) gained 0.4%, to close at 18,024.17. The Standard & Poor 500 (S&P 500) rose 0.2% to close at 2,082.17. The tech-laden Nasdaq Composite Index closed at 4,765.42; declining 0.3%. The fear-gauge CBOE Volatility Index (VIX) went down almost 3% to settle at 14.80. A total of about 5.41 billion shares were traded on Tuesday, lower than the month-to-date average of 7.78 billion. The day's volumes were light due to the upcoming Christmas Day holiday. Advancers outpaced declining stocks on the NYSE. For 62% stocks that advanced, 35% declined.
 
Positive third quarter GDP data lifted markets on Tuesday. The U.S. economy strengthened in the third quarter with GDP growth coming in stronger than expected. According to the “third” estimate by the Bureau of Economic Analysis, the third quarter output of goods and services produced by labor and property located in the United States increased at an annual rate of 5.0%, more than the consensus estimate of an increase by 4.3%. This rise in third quarter GDP was more than the second quarter's growth in real GDP by 4.6%.
 
Improved consumer spending helped GDP gain momentum at the fastest pace in 11 years during the third quarter. Real personal consumption expenditure accelerated by 3.2%, following a 2.5% increase in the second quarter.
 
In addition, growth was boosted by a pickup in construction spending, increased business spending on equipment, a bigger buildup in inventories and higher government spending.
 
Strong GDP report was able to offset a slew of disappointing economic reports. According to the Bureau of Economic Analysis, personal income increased 0.4% in November, less than the consensus estimate of a rise by 0.5%. This rise in personal income came after it had increased 0.3% in October. Personal consumption expenditure increased 0.6% in November, more than the consensus estimate of an increase by 0.5%. Personal consumption expenditure had increased 0.3% in October.
 
The U.S. Department of Commerce reported that new home sales decreased 1.6% in November to seasonally adjusted annual rate of 438,000 from revised October's figure of 445,000. Sales of new homes dropped at the slowest pace in four months in November. This fall in new home sales was in contrast to the consensus estimate of an increase to 460,000.
 
The U.S. Department of Commerce also reported that durable orders in November decreased 0.7%, contrary to the consensus estimate of a rise by 3.9%. The drop in November's durable orders followed a decline of 0.1% in October. November's durable orders dropped as The Boeing Company's (BA) airplane orders failed to materialize. Excluding transportation, manufactured durable goods decreased 0.4% in November.
 
Separately, the University of Michigan and Thomson Reuters' final reading of consumer sentiment was at 93.6 in December. This was more than the consensus forecast of a decrease to 93.2.
 
Meanwhile, energy and materials stocks led the gains among the S&P 500 sectors. The Energy Select Sector SPDR (XLE) gained 1.2%. The sector was the biggest gainer among the S&P 500 sectors. Shares of key energy stocks including Chevron Corporation (CVX), Schlumberger Limited (SLB), Kinder Morgan, Inc. (KMI), Occidental Petroleum Corporation (OXY) and Exxon Mobil Corporation (XOM) increased 1.7%, 0.7%, 0.9%, 2.6% and 1.4%, respectively.
 
The Materials Select Sector SPDR (XLB) gained 0.8%, emerging as the second highest gainer among the S&P 500 sectors. Key material shares such as Praxair Inc. (PX), E. I. du Pont de Nemours and Company (DD), Monsanto Company (MON), The Dow Chemical Company (DOW) and LyondellBasell Industries N.V. (LYB) increased 0.6%, 1.4%, 0.5%, 0.5% and 1.3%, respectively.
 
However, declines in bio-tech shares had a negative impact on the Nasdaq and restricted S&P 500's gains. The iShares NASDAQ Biotechnology Index (IBB) declined 4.7% and fell below its 50-day average. Shares of bio-tech companies such as Biogen Idec Inc. (BIIB), Vertex Pharmaceuticals Incorporated (VRTX), Amgen Inc. (AMGN), Celgene Corporation (CELG) and Regeneron Pharmaceuticals, Inc. (REGN) decreased 4.7%, 2.5%, 4.3%, 6.5% and 4.6%, respectively. Overall, 9 out of 10 sectors of the S&P 500 ended in the green.

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