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Benchmarks rallied on Black Friday propelled by encouraging economic reports from China and Germany. Volumes were at their lowest this year, owing to a holiday-shortened trading session. U.S. stocks registered their best weekly performance since June. Meanwhile, the S&P 500 posted its second best weekly performance of the year. The technology sector was the biggest gainer while utilities was the only loser among the S&P 500 industry groups.
The Dow Jones Industrial Average (DJI) surged 1.4% to close the day at 13,009.68. The Standard & Poor 500 (S&P 500) gained 1.3% to finish Friday’s trading session at 1,409.15. The tech-laden Nasdaq Composite Index jumped 1.4% to end at 2,966.85. The fear-gauge CBOE Volatility Index (VIX) declined 1.1% to settle at 15.14. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 2.8 billion shares, significantly lower than the year-on-year daily average of 6 billion shares. Advancing stocks outpaced decliners on the NYSE; as for 53% stocks that rose, 42% stocks moved lower.
The trading session began on a positive note after a report from Munich's Ifo institute revealed that German business confidence surged unexpectedly in November. According to the report, the German business climate index increased to 101.4 from 100 in October, beating economists’ estimates of 99.5. This is for the first time in eight months that German business confidence enjoyed an uptrend. Separately, the European Commission has estimated that the German economy will grow 0.8% this year and in the coming year.
Meanwhile, manufacturing in China increased in November and reached its highest level in thirteen months. According to HSBC Corporation, China’s preliminary Purchasing Managers’ Index increased to 50.4 in November from 49.5 in October. According to experts, data shows that the world’s second largest economy is on track to recovery and growth for the rest of the year will be stronger. According to Qu Hongbin, chief economist for HSBC China, “The November flash reading of HSBC manufacturing PMI confirms again that the economic recovery continues to gain momentum toward the year end.”
For the week ending November 23, the blue-chip index gained 3.3%, the S&P 500 surged 3.6% and the Nasdaq jumped 4.0%. Benchmarks registered one of their best weekly rallies after President Barack Obama’s meeting with top U.S. leaders hinted at “constructive” development regarding the “fiscal cliff”. The impact of $600 billion in tax increases and spending cuts will take its effect from the beginning of 2013 if not resolved by Congress.
Meanwhile, investors eagerly await the outcome of the meeting among Euro zone finance ministers, International Monetary Fund and the European Central Bank in Brussels. They will be meeting for the third time to discuss measures to reduce the Greece debt crisis. Euro zone finance ministers had postponed the much needed $40 billion installment for the Greece’s bailout loan in their previous two meetings.
The technology sector had a good run and was the biggest gainer among the S&P 500 industry groups. The Technology SPDR (XKL) gained 1.6%. Stocks such as Apple Inc. (NASDAQ:AAPL), Hewlett-Packard Company (NYSE:HPQ), Dell Inc. (NASDAQ:DELL), Microsoft Corporation (NASDAQ:MSFT) and Cisco Systems, Inc. (NASDAQ:CSCO) jumped 1.7%, 4.2%, 5.4%, 2.8% and 2.0%, respectively.
The Utilities SPDR lost 0.3% and was the only sector to close in the red. Stocks such as Exelon Corporation (NYSE:EXC), Public Service Enterprise Group Inc. (NYSE:PEG), The Southern Company (NYSE:SO), Entergy Corporation (NYSE:ETR) and PPL Corporation (NYSE:PPL) lost 1.0%, 0.5%, 0.6%, 0.4% and 0.5%, respectively.
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