Stocks took a breather on Monday, as investors took some profits from last week’s steep run-up. The markets slid again on Tuesday leading up to Alcoa’s kick-off of the fourth quarter earnings cycle after hours. Alcoa’s positive earnings report gave the major indexes a boost on Wednesday, as the Dow and S&P 500 recouped part of their losses from earlier in the week. On Thursday the rise continued with an 80 point gain by the Dow on positive job news. While initial unemployment claims rose more than expected, continuing jobless claims sank to their lowest level in more than four years. The S&P 500 also hit a 5-year high. The week ended on Friday with stocks essentially unchanged after a disappointing earnings report by banking giant Wells Fargo.
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The last day of 2012 was the best last day of a trading year ever, at least as far as the Dow is concerned which tacked on an additional 166 points on increasing optimism over a fiscal cliff solution. Trading resumed on Wednesday after New Years with a bang, as the markets reacted to the long-awaited, if not tardy, fiscal cliff solution from Congress. The 308 point Dow gain was its largest ever for the first trading day of a year. The rally stopped on Thursday following news that some Fed Reserve members are in favor of ending its bond-buying initiative to stimulate the economy. Still, the day’s losses were minimal. On Friday, stocks continued their upward trek on a job report that met expectations. The US unemployment rate rose marginally from 7.7% to 7.8%. The Dow finished at a 5-year high.
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Stocks logged a healthy 1% gain on Monday after news spread that US House Speaker John Boehner proposed a fiscal plan that included a tax rate increase, a first for the Republican side during the fiscal cliff discussions. Th Dow added an additional 100+ points on Tuesday, as further progress in fiscal cliff talks were made. On Wednesday the market gave back most of Tuesday’s gains when fiscal cliff talks stalled, as President Obama indicated he would veto Boehner’s “Plan B” that would raise taxes only on households earning more than $1 million. The major indexes experienced moderate gain on Thursday on positive economic news on several fronts. Third quarter GDP was revised up to 3.1%, November existing home sales rose more than expected, and the Philly Fed index of business activity increased much more than expected. Fiscal cliff concerns returned on Friday as a last-minute deal has not yet been struck by Washington. The Dow dropped 120 points as a result.
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On Monday, the major indexes traded in a narrow range around the unchanged mark as investors continue to wait for progress to be made in fiscal cliff talks. Despite marginally bad wholesale inventory and business optimism index reports, stocks enjoyed a strong showing on Tuesday, as the Dow moved back above the mark it held on election day last month. On Wednesday the Dow extended its winning streak to six sessions, albeit with a very tiny gain, despite the Fed’s announcement that interest rates would remain very low as long as the unemployment rate stays above 6.5%. A larger than expected drop in jobless claims failed to spark the market on Thursday, as moderate losses brought stocks down. The week ended on Friday on another down note as the S&P 500 lost its weekly gains despite a lack of bad news on the day.
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