FRIDAY, NOVEMBER 21, 2014...
U.S. stocks closed at highs on Thursday after encouraging domestic data alleviated concerns over continued signs of slowing growth in Europe and China. The Dow Jones Industrial Average and S&P 500 both ended the day at records. Intel led blue chips by gaining more than 4 percent after the technology firm reported an upbeat outlook for 2015 revenue and raised its dividend. The California-based company has benefited from a stabilizing personal computer market.
"Moving into next week, which is an abbreviated session, the market is going to spend some time on the higher end," said Peter Cardillo, chief market economist at Rockwell Global Capital. "The market is responding to the fact that we have solid fundamentals. The effect of weaker Chinese activity and (in) Euro land is not going to take much wind. We're finally seeing, in terms of economic growth, the effects of QE kicking in."
In the morning, the Philly Fed Index posted 40.8 for November, more than double the expected 18.3 and the highest since December 1993. Existing home sales hit 5.26 million and leading indicators gained 0.9 percent, both beating expectations for October. "We're getting a clear signal at the very least the U.S. economic data continues to be stronger... than the rest of the developed countries," said Art Hogan, chief market strategist at Wunderlich Securities.
Overnight, the Euro zone November flash composite purchasing manager's index (PMI) from Markit came in at 51.4, below estimates and October's final reading of 52.1. China's flash PMI from HSBC fell to 50.0, the breakeven level that separates expansion from contraction. "Any prolonged weakness out of Europe is going to affect the U.S. 2015 macroeconomic outlook," said Nick Raich, CEO of The Earnings Scout. He is waiting for action by the European Central Bank to stop deceleration in the Euro zone.
In the United States preliminary PMI data from Markit also posted a slowdown, with a fall to 54.7 from October's final reading of 55.9. Analysts had expected a rise. "Right now the market is just seeing the glass half-full in this chase for the year-end rally," said Peter Boockvar, chief market analyst at The Lindsey Group. "The mood is getting exaggerated now."
Stocks turned positive after opening lower on U.S. weekly jobless claims that fell more than expected at 291,000, with continuing claims the lowest since 2000. The Consumer Price Index for October was unchanged.
"There's this consensus that inflation is collapsing, and that clearly is not the case. If people are hanging their hat on the Fed not doing anything because there's no inflation, the CPI shows that's not the case," Boockvar said. "Weakness in Europe on the weak data is the catalyst for selling here," he said.
"I think the bottom line here is the U.S. economy and stock market are the only place to put money," said Marc Chaikin, head of Chaikin Analytics. "I think everybody has settled on the assertion that the U.S. is getting stronger and (given world events) is probably the best place to invest," said Kim Forrest, senior equity analyst at Fort Pitt Capital. She also noted that the relatively low trade volume ahead of next week's holiday.
Crude oil futures for December delivery settled up $1 at $75.88 a barrel on the New York Mercantile Exchange. Gold futures for December ended down $3 at $1,190.90. an ounce.