A late day selloff knocked the S&P 500 back to near break even but after lagging for a few weeks money has rotated back into tech stocks and small caps. This is a hallmark sign of a major bull market - constant rotation. The S&P 500 gained 0.01% and the NASDAQ 0.58%; for those who like round numbers the NASDAQ broke back over 4000 for the first time in 13 years. A good report on building permits - at a 5 year high - helped lift the housing sector out of recent doldrums. The Commerce Department said building permits jumped 6.2 percent to a seasonally adjusted annual rate of 1.03 million units. That was the highest rate since June 2008. Economists had expected building permits at a 930,000-unit rate in October. Permits increased 5.2 percent in September. August's permits were revised to a 926,000-unit pace from the previously reported 918,000 units. Permits lead housing starts by at least a month.
A very quiet session Monday as we launch into a holiday week. This is no surprise as many institutional traders take this week off. The S&P 500 fell 0.13% while the NASDAQ gained 0.07%. Signed contracts to buy existing homes fell for the fifth straight month in October, as the government shutdown added to an overall slowdown in the U.S. housing market. So-called pending home sales eased 0.6 percent from an upwardly revised September reading and are down 1.6 percent from October 2012, according to the National Association of Realtors. This is the lowest sales pace since December 2012. Pending home sales are an indicator of closed sales in November and December.
The market continues to be a playground for the bulls. After a 3 day detour downward, we saw the S&P 500 end at highs for the year Friday. This is the seventh consecutive week of gains, which is quite a rare feat (longest run in 3 years); since the politicians kicked the can down the road on the budget / debt, we've essentially been on a 1 way ride. The S&P 500 added 0.50% and the NASDAQ 0.57%.
Markets bounced convincingly after the first 3 day losing streak in quite a while. The S&P 500 added 0.81% and the NASDAQ 1.22%. We saw very good level of strength in the small caps today as the Russell 2000 jumped 1.80%. Financials led the way today which was a good sign for overall strength. Ironically economic news was bad this morning but we know what that means by now - bad news = more Federal Reserve.
The Philadelphia Federal Reserve Bank said its business activity index dropped to 6.5 in the latest month, from 19.8 in October. This month's figure was well below economist expectations for a reading of 15.0.
The market is operating under the same rules it has been under for a long time now - it is all about the Federal Reserve. This is now becoming very much like Groundhog Day - sell off on any hint of tapering of quantitative easing, rally on any sign it is pushed off. Today the Federal Reserve released minutes from its meeting a few weeks ago and as they have done periodically they dropped some hints of tapering at some point and the algorithms sold off the market and away we go. The S&P 500 fell 0.36% and the NASDAQ 0.26%.