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Stocks closed mildly lower after the Dow Jones Industrial Average managed to set a new intraday high, as the brunt of selling pressure seen earlier in the day disappeared ahead of the final trading day of the year. The market earlier was hurt by concerns about strong data forcing the Federal Reserve to keep rates high. However, the declines were minimal one day after the Dow Jones industrial average hit its highest close ever and one day before the end of a strong year on Wall Street.

Today, the Dow Jones industrial average closed down 9.05 or 0.07% to 12,501.52, the broader S&P 500 index closed down 2.11 or 0.15% to 1,424.73, and the Nasdaq closed down 5.65 or 0.23% to 2,425.57.

Market breadth was negative, and volume was moderate. On the New York Stock Exchange, losers beat winners 8 to 7 on volume of 770 million shares. On the Nasdaq, decliners topped advancers 4 to 3 as 1.07 billion shares changed hands.

Investors eyed a trio of bullish economic reports that caused worries that the Federal Reserve may not cut interest rates as soon as investors have been hoping. The pace of existing home sales rose in November from the previous month, although the median price dropped 3.1% to $218,000. While the pace of home sales picked up 0.6% from the 6.24 million rate in October, it was 10.7% below year-ago levels of 7.03 million units.

U.S. consumer confidence rebounded in December, rising to an eight-month high as consumers’ view of the labor market improved. The index of consumer sentiment climbed to 109.0 in December - its highest reading since April 2006 - from an upwardly revised 105.3 in November. This is against the forecast reading of 102.0. However, there is little to suggest sharp improvement in overall economic activity in the fourth quarter of the year.

The number of Americans filing new claims for unemployment rose less than expected last week. The number rose a smaller-than-expected 1,000 to 317,000 that showed a stable job market. Economist had forecast that claims would be a seasonally adjusted 320,000. The four-week moving average of claims, declined to 315,750, from 326,000 in the prior week.

Shares of Apple closed down $0.59 or 0.7% to $80.93, amid ongoing concerns about its options practices, which are under federal investigation. Apparently, the company gave CEO Steve Jobs 7.5 million stock options in 2001 without the approval of the board.

Shares of IBM closed down $0.14 to $97.06, after IBM and Siemens AG received a 10-year, $9.3 billion contract from the German armed forces to modernize their data centers, software and computers. Siemens will receive a 60% share of the deal, and IBM would get the rest. Stock of Siemens rose 1.2% to 75.02 euros on the news and were the top gainer in a flat German DAX. The two companies will co-manage the project, jointly holding 50.1% in the consortium running it. The German government holds the remaining 49.9%.

U.S. light crude oil for February delivery rose 41 cents to $60.75 a barrel on the New York Mercantile Exchange. The price of oil fluctuated after the weekly energy inventory report showed a big decline in oil reserves and a jump in gasoline stockpiles.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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