Traders-Blog.com

Stocks rallied and pushed the Dow Jones Industrial Average to a new closing high above the 12,500 mark. Unexpected robust housing sales data cheered investors. Additionally, falling oil prices, fresh burst of end-of-year buying fueled the markets.

Today, the Dow Jones industrial average closed up 102.94 or 0.83% to 12,510.57, its highest close ever. The broader S&P 500 index closed up 9.94 or 0.7% to 1,426.84, the Nasdaq closed up 17.71 or 0.73% to 2,431.22.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by 26 to 7 on volume of 972 million shares. On the Nasdaq, advancers beat decliners by 21 to 8 on volume of 1.234 billion shares.

Traditionally, the last days at the end of the year and the first few days of a new year have tended to be positive for equities. Additionally, the above-forecast new home sales numbers for November have some investors moving toward the opinion that the housing market may have bottomed out. This could lead to greater strength in the economy in 2007. The Dow hitting a new record was important for the psychology of the market, adding to hopes that the more than four-year old bull market can continue next year.

Investors welcomed a report showing a surprisingly strong jump in new home sales and prices in November. New homes sold at an annual pace of 1.05 million or up 3.4%, against the expected 1.02 million pace. The median average home price came in at $251,700, up from the $248,500 level in October. The inventory of new homes on the market came down to an estimated 6.3 months’ supply, compared to 6.7 months in October and 7.2 months in July.

Shares of Apple closed up $0.01 to $81.52, on news that federal prosecutors are looking into whether company executives falsified stock options documents. The shares sank as much as 6% in the morning, before recovering.

There is speculation that Ford President and CEO Alan Mulally and Toyota Chairman Fujio Cho were discussing a possible tie-up between the two companies. The two met last week in Japan, though further details are not known.

Shares of Burger King Holdings Inc. closed down 1 cent at $20.60, after stating that the fast food outlet’s U.K. sales could fall by 10% to 15% in Britain as it has stopped television advertising to children.

U.S. light crude oil for February delivery fell 52 cents to settle at $60.38 a barrel on the New York Mercantile Exchange. The contract was under pressure after forecasts for warmer-than-average temperatures in the Eastern U.S. dampened demand expectations, overshadowing political concerns involving Iran, Nigeria and Somalia.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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