Stocks Reach New Record Highs, As Usual

Stocks continued their march through uncharted territory, with the healthcare sector leading the way on Friday.
Stocks were back to their old routine of hitting new record highs on Friday. Atlanta Federal Reserve President Dennis Lockhart must have been given some tips from a psychologist as to how to prepare investors for the inevitable taper of the Fed’s bond purchases. Lockhart’s Friday appearance on CNBC presented the cutbacks to the Fed’s bond-buying in such a way as to finally convince the public that the taper will not bring about the apocalypse, as previously expected.

The Dow Jones Industrial Average (DIA) picked up 54 points to finish Friday’s trading session at a new record-high closing level of 16,064.77 for a 0.34 percent advance, after reaching a record intraday high of 16.068.78 The S&P 500 (SPY) climbed 0.50 percent to 1,804.76, closing above 1,800 for the first time after hitting a new record intraday high of 1,804.84.

The Nasdaq 100 (QQQ) advanced 0.57 percent to finish at 3,422. The Russell 2000 (IWM) climbed 0.47 percent to 1,124 after hitting a new record intraday high of 1,125.64.

In other major markets, oil (USO) declined 0.38 percent to close at $34.04.

On London’s ICE Futures Europe Exchange, January futures for Brent crude oil advanced 62 cents (0.56 percent) to $110.70/bbl. (BNO).

December gold futures were unchanged at $1,243.60 per ounce (GLD).

Transports rose further above the clouds on Friday, with the Dow Jones Transportation Average (IYT) climbing 0.44 percent.

In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks trimmed their earlier gains on Friday as the yen weakened to 100.98 per dollar just before the closing bell in Tokyo. Earlier in the session, the yen had fallen to 101.35 per dollar, sending the Nikkei 225 as high as 15,554 – where it remained for an hour. As the yen strengthened later in the session, stocks gave up most of their gains. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY). Toyota shares climbed 0.96 percent on the Tokyo Stock Exchange. The Nikkei 225 Stock Average rose 0.10 percent to 15,381 (EWJ).

In China, stocks faded on the mainland and advanced in Hong Kong. Downbeat commentary about the nation’s economy resulting from the HSBC China Flash Manufacturing PMI for November which dipped to 50.4 from October’s 50.9 continued to haunt investors. Nevertheless, recent disclosures concerning the nation’s economic reforms kept bullishness alive in Hong Kong. The Shanghai Composite Index declined 0.43 percent to 2,196 (FXI). Hong Kong’s Hang Seng Index advanced 0.49 percent to end the day at 23,696 (EWH).

Stocks made decent gains in Europe after the Ifo Institute’s Business Confidence Index for Germany jumped to 109.3 in November from October’s 107.4. The Euro STOXX 50 Index finished Friday’s session with a 0.38 percent advance to 3,055 – remaining above its 50-day moving average of 2,991. Its Relative Strength Index is 56.43 (FEZ).

Technical indicators revealed that the S&P 500 climbed further above its 50-day moving average of 1,734 after advancing 0.50 percent to finish Friday’s session at 1,804.76. Its Relative Strength Index rose from 64.04 to 66.53. The MACD has crossed back above the signal line, which would suggest that the S&P will continue to advance in the immediate future.

On Friday, most sectors finished in positive territory, except for the technology and utilities sectors. The healthcare sector led the group, with a 1.34 percent advance.

Consumer Discretionary (XLY): +0.56%

Technology: (XLK): -0.20%

Industrials (XLI): +0.88%

Materials: (XLB): +0.52%

Energy (XLE): +0.54%

Financials: (XLF): +0.47%

Utilities (XLU): -0.08%

Health Care: (XLV): +1.34%

Consumer Staples (XLP): +0.52%

Bottom line: Atlanta Fed President Dennis Lockhart’s appearance on CNBC marked the first time a FedHead was able to discuss the taper without crashing the stock market. Lockhart did such a good job that the Dow and the S&P hit new record highs. The healthcare sector continued its run as the strongest stock market sector of 2013.

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