U.S. markets began the week quietly as Monday was the lowest-volume full trading day on the New York Stock Exchange this year with just over two billion shares traded. The sluggish trading was the result of a slow holiday week exacerbated by a massive snowstorm that brought New York City and much of the Northeast to a standstill.
The year ended with ongoing concerns by investors worldwide about the European sovereign debt crisis, a murky outlook on the domestic housing and jobs fronts, and a U.S. municipal bond market that is set to have its worst quarter since 1994. Still, many investors are feeling optimistic that the stock market rally which started at the end of August will continue into 2011. A number of stock indices, particularly those in North American and Europe, are on track to post double-digit percentage gains for 2010.
U.S. financial markets are open today, New Year’s Eve. The bond market closes early at 2 p.m., and many overseas markets will have shortened sessions or will be closed on Friday. Happy New Year to all!
Global economic news
Confidence of American consumers drops slightly in December
The Conference Board’s Consumer Confidence Index unexpectedly fell to 52.5 in December from a revised 54.3 in November. The New York-based research group said lackluster economic growth and a pessimistic jobs outlook are largely to blame for the drop. The median forecast for U.S. consumer confidence, based on a survey of 61 economists, had projected confidence would rise to 56.3.
Italian business confidence hits 34-month high
The Isae institute’s manufacturing-sentiment index, which measures Italian business confidence, climbed to 103 in December, from a revised 101.7 in November. The latest figure, the highest level for the index in almost three years, indicates increasing optimism about economic recovery in the region.
Initial U.S. jobless claims at lowest level since July 2008
The U.S. Department of Labor reported that the number of initial jobless claims filed fell to 388,000 in the week ended December 25, down 34,000 from an upwardly revised 422,000 claims the previous week. It is the first time in over two years that the number of Americans filing new unemployment claims fell below the 400,000 level.
Pace of German inflation accelerates in December
The inflation rate in Germany increased to 1.9% in December from 1.6% in November, according to the Federal Statistics Office in Wiesbaden. That is the highest rate since October 2008 and higher than the rate expected by economists who had projected an unchanged reading. Consumer prices jumped 1.2% from November, the biggest monthly gain since December 2002.
U.S. home prices tumble in October, third straight month-over-month drop
The Standard & Poor’s/Case-Shiller Home Price Indices, a broad gauge of U.S. home prices, fell 1.3% in October from a month earlier. The October drop in prices represents an annualized decline of 15%. Prices in 20 major U.S. metropolitan areas were down 0.8% from October 2009, the biggest year-over-year decline since December 2009. Many economists project that the declines will continue into at least next spring.
French economy expands; pace of growth slows from previous quarter
The Paris-based statistics office Insee reported that France’s gross domestic product rose 0.3% in the third quarter, down from a 0.6% gain in the second quarter.
European retail sales grow at fastest pace since May 2008
A gauge of European retail sales increased to 52.9 in December from 51.3 in November, London-based Markit Economics reported on its Web site. The index, which is at its highest level since May 2008, is based on a survey of more than 1,000 executives. A reading above 50 indicates expansion.
Global corporate news
Cal-Maine Foods reported that its profit for the fiscal second quarter ended November 27 was $15.2 million, down from $16.1 million a year earlier. This represents a 5.6% drop in earnings for the largest U.S. producer and distributor of fresh-shell eggs. The company cited higher feed costs for the earnings decline.
BJ’s Wholesale Club reportedly hired investment bank Morgan Stanley to conduct an auction of the chain after receiving an unsolicited bid from Leonard Green & Partners LP earlier this year. But if the retailer does not move forward with the auction soon, Leonard Green, the Los Angeles private equity firm that bought 9.5% of the chain last summer, could launch a hostile takeover bid. Some analysts have estimated that BJ’s could sell for as much as $3 billion at auction.
Groupon, the Chicago online discount coupon site that earlier this month turned down a $6 billion takeover bid from Google, has filed to raise up to $950 million from the sale of preferred stock. Andrew Mason, Groupon’s chief executive, is raising money as he considers an initial public offering in 2011. This would be the biggest round of equity financing since Pixar sought approximately $500 million in 1995.
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