Marc Pado Comments: Dow Ends Winning Streak; Nasdaq Up A Third Session

December 28, 2011, MarketWatch

U.S. stocks took a last-minute turn Tuesday with the Dow industrials finishing slightly lower, putting an end to a four-session winning streak, but the S&P 500 and Nasdaq closed modestly higher on the heels of a jump in consumer confidence.

"Equities had almost no conviction today and will probably indicate little conviction all week due to the holidays," said Richard Hastings, a macro strategist at Global Hunter Securities.

After a 427-point gain last week, the Dow Jones Industrial Average on Tuesday slipped 2.65 points, or 0.02 percent, to close at 12,291.35, a level that still has it up 6.2 percent on the year, with three sessions remaining.

The index, which had tallied a gain of 4.5 percent over the last four sessions, spent most of the session trading higher.

"Year-end always brings wild swings in the market due to year-end tax selling by investors," said Keith Springer, president of Springer Financial Advisors, pointing out that at this time of year, the average investor sells their losses for tax reasons.

The day’s decline "could have been worse if it were not for a stronger-than-expected consumer confidence figure which showed that Americans are starting to feel better about the economy," he said. Hopefully that will "lead to more hiring and consumer spending."

McDonald’s Corp. was at the top of the blue-chip heap for 2011, with the fast-food chain up 31 percent from the end of 2010. Bank of America Corp. was at the bottom, down almost 59 percent for the nearly ended year.

Up 0.6 percent year-to-date, the S&P 500 Index rose 0.1 point, or 0.01 percent, to 1,265.43, with utilities up the most and financial companies among the laggards in its 10 major industry groups. The index tallied a five-session climb of 5 percent.

Sears Holding Corp.’s shares fell 27 percent. The retailer said it would close as many as 120 stores after sales of consumer electronics fell during the holiday shopping season.

The Nasdaq Composite climbed 6.56 points, or 0.3 percent, to 2,625.20, off 1 percent from Dec. 31, 2010. It’s now posted gains for three-straight sessions.

U.S. stocks had seen support Tuesday from "better-than-expected economic reports in the U.S., hopes for a good first-quarter earnings season, the belief that European leaders are working towards resolving the debt crisis and a lack of headlines out of Europe," said Robert Pavlik, chief market strategist at Banyan Partners.

"However, if the market is presented with another earnings miss by a large-cap multinational such as the miss by Oracle Corp., then we believe the optimism (that) has been building could quickly fade," he said, ahead of the close.

"The market remains undervalued on a historical basis, which offers support to the downside, but does little to initiate inspiration to the upside," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

Advancers edged ahead of decliners on the New York Stock Exchange, where 495 million shares traded at the close.

On the New York Mercantile Exchange, crude-oil futures climbed for a sixth session to end at $101.34 a barrel, up $1.66, while gold futures fell for a fourth session, losing $10.50 to finish at $1,595.50 an ounce.

The 10-year Treasury yield lately stood at 2.005 percent and the U.S. dollar weakened some against a basket of currencies.

"We had the sense that the stock market is wary of the crude oil price and supply threat to profit margins and to trade," said Hastings. "This could be a catalyst for the rest of the week, especially if nothing else takes the stage."

On Tuesday, the Conference Board reported its index of confidence among U.S. consumers hit an eight-month high in December, rising to 64.5 from a revised 55.2 reading the month before.

The S&P/Case-Shiller index of property values in 20 cities fell 3.4 percent in October from the year-ago period, illustrating the housing market remains troubled by foreclosures.

"The question is of course when will this end and that won’t likely be until more of the foreclosure backlogs get worked off," Peter Boockvar, equity strategist at Miller Tabak, wrote in emailed commentary.