Stock Report For Week Ended December 6, 2013
Stocks snap winning streak
Stocks ended mixed for the week, snapping a streak of eight weekly gains for the S&P 500 Index. Economic and profit concerns drove some of the trading, but some speculated that investors' desire to lock in gains following the market's strong run so far in 2013 may have also played a role. The S&P MidCap 400 Index recorded a small gain, but the small-cap Russell 2000 Index suffered a notable loss and fared worst among the major benchmarks.
Worries grow over Fed tapering...
For much of the week, investors appeared to continue a recent pattern of treating good news for the economy as bad news for stocks. This was particularly true on Thursday, when stocks fell after the Labor Department reported a sharp drop in weekly jobless claims. The data reinforced a report the previous day from a private payroll processing firm showing a large gain in jobs in November. Investors worried that the good jobs data might cause the Fed to announce-perhaps as early as its December meeting—that it would begin tapering its purchases of bonds, which has helped keep a lid on interest rates and encouraged investment in riskier assets, including stocks.
...but diminish as good jobs news is welcomed
Investors seemed to put these fears aside when the official November jobs data were released on Friday, however. Stocks surged following the Labor Department's announcement that employers had added over 200,000 jobs in November, while the unemployment rate had declined to a five-year low of 7.0%. The favorable outlook was further bolstered by news that a gauge of consumer sentiment had risen to its highest level since July.
Mixed signals on holiday spending
The favorable jobs and sentiment data may have helped overcome some worrying signs about consumer spending earlier in the week. Despite some favorable initial signals on "Black Friday" itself, data released during the week indicated that consumer spending had increased at only a modest pace relative to the previous year, held down by a substantial drop in apparel sales. Retailers are wrestling with a smaller-than-average number of shopping days between Thanksgiving and Christmas.
Concerns over bank profits weigh on financials sector
Financial stocks underperformed during much of the week, due in part to worries that bank profits might fall under new regulations that are proving stricter than some had expected. Speculation grew that the final draft of the so-called Volcker Rule, which regulates trading activity by financial institutions with insured deposits, would weigh heavily on profits at some of the biggest banks.
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