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Saturday, 17 December 2011 | 00:03
DJ30 PointChange: -2.42 Level: 11866.39 NASDAQ PointChange: +14.32 Level: 2555.33 NQ100 PercentChange: +0.5 R2K PercentChange: +0.8 SP400 PercentChange: +1.0 SP500 PointChange: +3.91 Level: 1219.66 NASDAQ-Adv:1412 Dec: 1103 NYSE-Adv:1863 Dec: 1121 [BRIEFING.COM] The stock market was bid higher in the early going, but for the second straight session its failure to overcome resistance resulted in selling that left the major averages to finish the week in relatively mixed fashion.

This morning stocks benefited from strong buying on above-average volume, which was inflated because it was a quadruple witching options expiration day. Another pullback in sovereign debt yields was regarded as a relatively tacit sign that confidence in the precarious eurozone periphery may have improved, at least for the time being. That notion als helped the euro, although the currency's early gain was eventually clipped.

Although Europe's bourses ultimately forfeited their gains to end the week on a down note, many there seemed unsurprised by the decision by Fitch to cut ratings on several of the continent's major financial outfits. Bank of America (BAC 5.20, -0.06) and Goldman Sachs (GS 90.10, -1.80) were included in that list, but financials still provided leadership. The sector settled with a 0.5% gain after retreating alongside the broad market.

The broad market had been up about 1% in the early going, but rolled over after it falled to push past a key pivot point. Interestingly, that point proved too much to overtake after the S&P 500 successfully cleared its 50-day moving average, which had been a challenging line in the prior session and in the opening minutes of trade on Friday.

The modest gain helped improve the stock market's weekly performance, but not by much. Stocks suffered a weekly loss of slightly less than 3%. They're also down about 3% year to date.

The inability to overcome resistance in the prior session also prompted participants to turn against stocks. Buyers had initially began to scoop up stocks after the broad market had tumbled for a cumulative loss of more than 3% during the course of only three sessions. Sentiment was strengthened amid a successful debt offering from Spain and news of improved eurozone manufacturing activity during December. Domestic data also provided encouragement in the early going, but it was eventually shrugged off.

The first three sessions of the week saw stocks average losses of about 1%. A lack of progress by Europe's leaders in restoring economic and financial conditions in both the core and periphery of the continent often hung over the minds of many traders. Those themes also implicated the euro; it dropped to an 11-month low near $1.29 on Wednesday before makng a modest recovery in the back half of the week. The euro suffered a weekly loss of 2.6%.

Trade on Tuesday saw stocks advance in the early going, but inevitably rolled over as participants opted to sell after the Fed failed to offer any new sign that it may be considering the implementation of another round of quantitative easing. Instead, the Fed kept its target interest rate in the range of 0.00% to 0.25% and remained committed to extending the average maturity of its holdings, as had been widely expected.

The week began with participants discouraged by data that showed China, a key player in keeping the global economy afloat, experienced a slowdown in export growth during November. Concerns were also raised about the formidable task associated with the efficient implementation of plans established during the previous week's eurozone summit.

Corporate news was mixed this week. Dow component and semiconductor bellwether Intel (INTC 23.23, -0.08) disappointed investors at the beginning of the week by issuing a cautious outlook. Big box electronics retailer Best Buy (BBY 23.19, -0.17) posted earnings that came short of what Wall Street had expected. On the positive side of things, FedEx (FDX 84.89, +1.42) reported a better-than-expected bottom line, while Discover Financial Services (DFS 24.23, +1.16) posted an upside earnings surprise of its own. The company also increased its quarterly dividend. A strong quarterly report from Adobe Systems (ADBE 28.20, +1.74) proved pleasing to investors at week's end.

Data for the week featured retail sales numbers for November that featured a 0.2% increase in both total sales and sales less autos. Total sales had been expected to increase by 0.6%, while sales less autos had been generally expected to post a 0.5% increase.

The latest initial weekly jobless claims tally dropped to a 43-month low of 366,000. Economists polled by had expected something closer to 390,000.

December readings for the Empire State Manufacturing Survey and the Philadelphia Fed Survey improved to 9.5 and 10.3, respectively. It was generally expected that the Empire State Manufacturing Survey would improve to 3.0 and that the Philly Fed Survey would improve to just 4.5.

Industrial production declined by 0.2%, which contrasted with the consensus call for a 0.2% increase. Industrial production last declined in April.

November price data were also posted this week. Overall producer prices increased by 0.3%, but core prices increased by 0.1%. Total consumer prices were flat, but core prices increased by 0.2%. All producer price measures and consumer price measures had been expected to increase by 0.1%. There was nothing unusual in the core data that suggests inflationary problems may be gaining traction as we head into 2012.

Precarious market conditions spurred above-average demand at the latest series of Treasury auctions. An auction of 3-year Notes drew a bid-to-cover of 3.62, dollar demand of $115.8 billion, and an indirect bidder participation rate of 39.1%. An auction of 10-year Notes attracted dollar demand of $74.1 billion on a bid-to-cover ratio of 3.53 and an indirect bidder participation rate of 61.9%. A 30-year Bond auction drew a bid-to-cover of 3.05, dollar demand of $39.7 billion, and an indirect bidder rate of 32.5%. By the end of the week the yield on the benchmark 10-year Note dropped to a two-month low just beneath 1.85%.

Source: Briefing

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