Indices register huge yearly gains as Fed trims bond purchases
US stocks rose on Tuesday, 31 December 2013, the last trading day of CY 2013 and ended the year with a bang. The Dow Jones Industrial Average and the S&P 500 rang out 2013 with record closes on Tuesday, ensuring blue chips posted the biggest annual gain in 18 years. In the end, the Federal Reserve's decision earlier this month to begin scaling back the size of its monthly bond purchases cheered investors. The major averages wrapped up a memorable year with a forgettable final session.
The Dow Industrials rose 72.37 points, or 0.4%, to end at 16,576.66, its 52nd record close of the year. The blue chips ended 2013 with an annual rise of 26.5%, the largest since 1995. The Nasdaq Composite advanced 22.39 points, or 0.5%, to end at 4,176.59 for its highest finish since September 2000. The index rose more than 38% over the course of 2013, marking its biggest gain since 2009. The S&P 500 rose 7.29 points, or 0.4%, to close at 1,848.36 Tuesday. The index ended the year with a 29.6% annual gain, its biggest yearly jump since 1997.
Seven of ten sectors registered gains as cyclical groups provided leadership. The energy sector led from the start contributing to the strength after Berkshire Hathaway agreed to acquire Phillips Specialty Products, a flow improver business.
Among blue chips, American Express rose 1.3%, while United Technologies advanced 1% to lead the Dow higher. Boeing followed by American Express were the top Dow performers in 2013, with Boeing posting an annual rise of more than 81% and American Express gaining nearly 58%.
Outside of energy, the technology sector was the only other noteworthy outperformer. The largest component, Apple broke its four-day losing streak, gaining 1.2%.
Today's economic data at Wall Street featured three reports. The October Case-Shiller 20-city Home Price Index rose 13.6% while a 13.8% increase had been expected by the consensus. This follows the previous month's increase of 13.2%. The Chicago PMI reading for December dropped to 59.1 from 63.0 while the consensus expected a decline to 60.0. The reported decrease was not too concerning given that readings above 60.0 are not sustainable for a long time. Production growth slowed as the related index fell to 57.9 from 64.3. The weakness stemmed from a softening in new orders growth, from 68.8 in November to 60.7 in December.
Separately, the December Consumer Confidence Index increased to 78.1 from 72.0 while the consensus expected an increase to 77.1. Although the index posted a solid increase, the jump was a result of consumer attitudes returning to pre-government shutdown levels. In reality, confidence levels have essentially held steady since late summer.
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Bullion prices ended lower on Tuesday, 31 December 2013, the last trading day of CY 2013. Gold futures settled slightly lower on Tuesday, snapping a 12-year winning streak for the precious metal. U.S. gold futures nearly got mugged again on the final day of 2013 but managed to fight back and hold their ground - finishing mostly steady and just above the $1,200-an-ounce area.
Gold for February delivery fell $1.50, or 0.1%, to settle at $1,202.30 an ounce on the New York Mercantile Exchange. For the year, gold fell 28%, its worst year in about three decades. March silver futures shed 24 cents, or 1.3%, to settle at $19.37 an ounce. For the year, silver futures measured by the continuous contract have plunged nearly 36%. This year's losses for gold and silver futures are the worst since at least 1984.
Gold futures have plummeted on expectations and the final December announcement that the Federal Reserve would begin to pare back on its monetary stimulus. The Fed is set to reduce its monthly bond purchases to $75 billion in January from $85 billion. Those purchases, which could come to an end by late 2014, have helped support gold prices. Plus, investors have grown less worried about run-away global inflation and have flocked to a roaring stock market.
Crude oil futures fell at Nymex on Tuesday, 31 December 2013, the last trading day of CY 2013. Prices slid to just above $98 but notched a 7% gain for a year, which was marked by improving global economic growth and plentiful U.S. supplies. Natural gas surged 26%, its best annual tally in eight years.
February crude oil fell 87 cents, or 0.9%, to settle at $98.42 a barrel on the New York Mercantile Exchange on Tuesday. For the month, Nymex crude rose 6.2%, its best month since July. For the year, however, crude prices rose 7.2%.
Indian ADRs ended higher on Tuesday. In the IT space, Infosys added 0.11% at $56.60 and Wipro rose 0.64% at $12.59. In the banking space, ICICI Bank gained 0.54% at $37.17 and HDFC Bank shed 0.98% at $34.44. In the other sectors, Tata Motors was up 0.49% at $30.80 and Dr Reddy's Laboratories jumped 0.27% at $41.03.
There is no economic data on tomorrow's schedule as bond and equity markets will be closed for New Year's Day.
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