Weston, Dec 26^th (Tradershuddle.com) – Investors cheered during the shortened holiday week, as they pushed stocks to new yearly highs. Despite revisions to 3^rd quarter GDP and a dismal report on new home sales, the market pushed higher led by technology and raw material producers, as investors focused on upbeat labor and economic data. Treasuries declined pushing yields to the highest levels since August.

For the week, the Dow gained 1.85%, while the S&P 500 climbed 2.12% and the NASDAQ jumped 3.3%.

At the start of the week, the market started strongly to the upside as analyst upgrades and good global economic data that showed the recovery is gathering momentum, helped boost investor sentiment. Exports in Japan slid at the slowest pace in 14 months as strong demand from Asia helped the nation’s recovery. Also in Europe forecast for economic growth pushed investors to buy equities.

Alcoa (NYSE:AA) gained 7.9% to $15.73 and led both the Dow and S&P 500 index in gains after Morgan Stanley said the shares may climb to $22 and predicted the rally in aluminum prices may continue in the first half of 2010. Aluminum for delivery in three months climbed 1.4% on the London Metal Exchange today.


And Intel (NASDAQ:INTC) had the second biggest gain in the Dow, jumping by 2.34%, after Barclays Capital upgraded the stock to "overweight”, citing seemingly solid end market conditions, an upward bias to estimates, and  an intriguing valuation.

The Senate voted to end debate on revisions to a major health-care reform bill. And health-care stocks rallied as the Senate bill advanced without provisions seen as detrimental to the industry. Cigna (NYSE:CI) and Aetna (NYSE:AET) led the sector as they were both up about 4%.

The Treasury yield curve, the difference between 2 and 10-year Treasury note yields, widened to a record as investors bet an accelerating recovery will fuel inflation and hurt demand for unprecedented sales of government debt. The yield curve is seen as a barometer of the health of the U.S. economy. The yield on the benchmark 10-year note climbed to 3.67%.

On Tuesday, the market started to the upside, despite a report from the Commerce Department that revised the 3rd Quarter GDP growth to 2.2% from 2.8%, indicating the economy grew at a slower pace than anticipated as companies curbed spending and cut inventories at an even faster pace than estimated.

Stocks added to gains after the National Realtors Association said home sales rose 7.4% in November, a reading much better than expected, though the gains came mostly from the low end of the market and one in three sales was off a foreclosure.

Home builders, energy and technology companies pushed the market higher. Banks declined 0.4% collectively for the steepest decline among 24 industries in the S&P 500 on speculation the Federal Reserve may raise rates in 2010 as the economy recovers.

The Dollar strengthened after the increase in home sales prompted yields to increase. The greenback rose against the euro and increase the most in eight weeks against the yen, as traders reacted to the higher yields.

Crude oil rose after the dollar pared gains against the euro and on signals that economies around the world are improving. The contract for February delivery rose 68 cents to settle at $74.40 a barrel.

Treasuries fell, pushing the 10-year note’s yield to the highest level in four months.

Yesterday, stocks fluctuated, with the S&P 500 and the Dow finishing mostly flat, while the NASDAQ moved higher to new yearly highs, as an unexpected drop in new home sales dragged down consumer and industrial shares, damping gains in the overall market.

The market opened higher lifted by a global advance on signs that the economic recovery is gathering momentum. The Commerce Department reported that consumer spending rose 0.5% in November, shy of economists’ expectations, but showing its second consecutive monthly gain while income rose the most in six months.

The market lost its gains after a dismal new homes sales report, which showed new home sales tumbled 11.3% in November, raising the concerns that earlier positive signs in the industry were the result of government stimulus.

Also, the Reuters/University of Michigan Surveys of Consumers said the final December reading on the index of consumer sentiment was 72.5, the highest since September, but the latest figure fell short of analysts' median expectation of 73.5.

Raw-materials stocks rose 1.5% and posted the biggest gains in the S&P 500 among 10 key sectors. Energy shares also pushed higher 0.5% collectively for the third largest increase in the broad market index.

20 of the 30 Dow components posted gains, with Alcoa (NYSE:AA) leading the blue chip index in gains. The aluminum producer jumped 1.33% to $16.00. As a weaker Dollar helped raw material producers with metals rallying.

Crude oil rallied the most in a month after a U.S. Energy Department report showed a larger-than- forecast drop in U.S. stockpiles. Supplies fell 4.84 million barrels to 327.5 million last week, the biggest decline since September. Stockpiles of gasoline and distillate fuel dropped as demand increased. The contract for February delivery climbed $2.27 to $76.67.

Treasuries were little changed as the U.S. announced plans to sell a record-tying $118 billion in 2-, 5- and 7-year notes next week. Government securities increased earlier after reports showed spending by U.S. consumers rose less than forecast and purchases of new homes unexpectedly fell to a seven-month low in November. The yield of the benchmark 10-year note traded at 3.75%.

On Thursday, stocks finished higher reaching new highs for the year, as the holiday week closed on a shortened trading day.  Upbeat economic reports helped bulls lift the market during all the trading session.

The Labor Department reported that weekly jobless claims fell by 28,000 to a seasonally adjusted 452,000 in the week ended Dec. 19, from 480,000 in the prior week. The report showed the lowest number of claims since the week of Sept. 6, 2008, just before the failure of Lehman Brothers.

A separate report showed orders for long-lasting goods edged up 0.2 percent, less than analysts had expected but weighed by transportation orders. Outside that sector, orders surged in November.

The Senate approved the health care reform bill in a historic Christmas Eve vote. House and Senate conferees will have to work out the differences between their two bills some time after the holidays. Health-care stocks had the only decline in the S&P 500 among 10 industries, falling 0.2%, but basically the market treated the passage of the reform bill as a non event.

Technology shares rose 0.9% for the biggest gain among 10 industries in the S&P 500, with raw materials posting a close second. On the tech side, Apple (NASDAQ:AAPL) jumped 3.44% to $209.06 to post one of the NASDAQ biggest gains as speculation mounted that the company will unveil a long awaited tablet pc in late January.  The tech giant also posted the 4th steepest advance in the S&P 500. Reports that the company reserved a venue to on January 26 that has been used to unveil new products fuel the speculation.

SanDisk Corp. (NASDAQ:SNDK) led the S&P 500 after shares of the memory chip company jumped 6.53% to $30.13. , shares continued to benefit from  a an industry tracker DRAMeXchange report, which states that DRAM chips could be in short supply next year as companies replace PCs and consumers demand more capacity.

The Dollar was mixed, with the greenback trading at almost an eight-week high against the yen as orders for durable goods pushed Treasury yields higher and widened the yield difference between U.S. and Japanese debt to the widest level since August 2008. The euro gained against the Dollar spurring commodities demand as an alternative investment.

Treasuries fell as reports on jobless claims and durable goods suggested growth is accelerating as the U.S. prepares to auction $118 billion of debt in the final three note sales of this year. The yield on the benchmark 10-year note climbed to 3.81%, reaching the highest level since Aug 10.

The S&P 500 is now comfortably above the 1,120 level and on pace for a 1,140 – 1,150 year end close. Investors will be looking for a Santa Rally, which usually materialize on the last 5 days of the trading year and they come with an average move of 1.5% to 2% to the upside.

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