12/24/2014
By Dominique Paul, Research Analyst

The markets finished in the green with the NASDAQ recovering its losses from yesterday’s session. The Dow Jones Industrial Average pulled back briefly in the premarket, then surged during today’s session. It came within 20 points of reaching $18,100, but that will have to be for a longer trading day. The markets were helped by a few data releases casting positive light on the economy.

The Mortgage Bankers’ Association’s (MBA) Purchase applications report for the week ended December 19^th demonstrated reversals from last week’s lows. The purchase index rose 1.0 % after declining 7% in the previous week while the refinancing index rose 1.0% from a 0.0% change in the previous week. Consumers were encouraged to purchase new homes or refinance their current one by the conforming 30-year fixed mortgage (417,000 or less) rates remaining at a one-and-a-half year low of 4.02%. Overall, the composite index climbed 0.9% during the week after declining -3.3% in the previous week. This data leads us to believe that December home sales will be stronger than the home sales observed in November.

The labor market is also showing some signs of life. For the week ended December 20^th, initial jobless claims decreased by 9,000 to 280,000. This resulted in the 4-week average falling by 8,500 to 290,250 which is significantly lower than the 4-week average from a month ago. Continuing claims, which lag by a week, rose 25,000 to 2.403 million. For continuing claims, the 4-week average climbed to 2.418 which is approximately 50,000 higher than the month-ago comparison. Despite the rise in continuing claims, total claims remain relatively low for the month of December which point to a positive employment report next week.

For the week ended December 21^st, Bloomberg found consumer confidence rose to 43.1 following an increase to 41.7 in the previous week. Consumers are more encouraged by positive employment trends and the notion that low gas prices are here to stay. Especially as the price for crude oil futures dipped to as low as $55.07.

We wish everyone has a safe and happy holiday season.

Dominique Paul
Wall Street Strategies

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