Markets showing more stability
NEW YORK – Wall Street put together a moderate advance in light post-Christmas trading Friday after the government threw a lifeline to General Motors’ financing arm, but gains were limited by dreary holiday shopping readings that dimmed the chance of a big year-end rally.
The major indexes finished the week with losses, but the market nonetheless showed further signs of stability.
The Dow Jones industrial average ended the week down 63.56, or 0.74 percent, at 8,515.55. The Standard & Poor’s 500 index fell 15.08, or 1.7 percent, at 872.80. The Nasdaq composite index ended the week down 34.08, or 2.17 percent, at 1,530.24.
The Russell 2000 index finished the week down 9.49, or 1.96 percent, at 476.77.
The Dow Jones Wilshire 5000 Composite Index – a free-float weighted index that measures 5,000 U.S. based companies – ended at 8,769.35, down 154.62 points, or 1.73 percent, for the week. A year ago, the index was at 14,911.63.
The news from the retailing sector was far from surprising: Americans spent much less on gifts this season than they did last year, according to SpendingPulse, a division of MasterCard Advisors. Retail sales dropped between 5.5 percent and 8 percent compared with last year, the data showed, or between 2 percent and 4 percent after stripping out auto and gas sales.
Ever since the Thanksgiving weekend, it has been widely expected that this holiday season would be dismal, and analysts believe that a great deal of the poor economic news of late, including weak holiday spending, has been factored into stock prices.
Still, personal consumption is a huge part of U.S. economic activity – comprising more than two-thirds of gross domestic product – so Wall Street remains concerned that a more frugal consumer could keep the economy weak in 2009. The market will be paying close attention to the Conference Board’s December survey on consumer confidence, to be released on Tuesday. The survey will include data on consumers’ expectations for the future.
Investors did get a some good news on Christmas Eve, when the Federal Reserve allowed GMAC Financial Services – the finance arm of struggling Detroit automaker General Motors Corp. – to become a bank holding company and thus qualify for the government’s $700 billion rescue fund. Analysts had said that without financial help, GMAC might have had to file for bankruptcy protection or shut down.
The Dow is down 35.8 percent for the year, while the S&P 500 is down 40.56 percent and the Nasdaq is off 42.3 percent. Since peaking in October 2007, the Dow has lost 39.88 percent, the S&P 500 is down 44.24 percent and the Nasdaq has skidded 46.48 percent.
Trading is likely to remain light next week as many investors remain on vacation for the holidays.