The U.S. stock market ended off a strong week with an advance that sent the S&P 500 higher by 0.5% to extend its weekly gain to 3.4%. The Dow Jones Industrial Average underperformed today, only rising 0.2%, but the price-weighted index still managed to add 3.0% for the week.
On the week, the Dow Jones Industrial Average was up 26.65 points to close at 17,804.80 while the NASDAQ was up 16.98 points to close at 4,765.38. Meanwhile, the S&P 500 was up 9.44 points to close at 2,070.65. After adding more than 88 points in the previous two sessions, the S&P 500 spent the first half of the day near its flat line, but climbed ahead of the close. Despite the sharp midweek surge, buying interest remained in place today with nine of ten sectors ending the day on the up.
Dow Jones Industrial Average (December 15th – 19th, 2014)
The energy sector was up 3.1%, finishing in the lead and extended its weekly gain to 9.7%, which put the growth-sensitive group well ahead of the remaining sectors. Crude oil contributed to today's rally as the energy component settled higher by 5.4% at $57.10/barrel and continued its advance to $58.00/barrel.
Outside of energy and materials, only one other sectors were able to end ahead of the broader market. Elsewhere, the health care sector was up 0.4%, slipping behind the market into the close, but biotechnology outperformed. As for the broader technology sector it was up 0.1%, the top-weighted group was kept behind the broader market by relative weakness in influential components like Apple, Intel and Visa.
Friday’s participation was well ahead of average, which was caused by quadruple witching. As a result more than 2.1 billion shares changed hands at the New York Stock Exchange floor. Traders did not receive any economic news on Friday and Monday's data will be limited to the Existing Home Sales report.
On Friday, U.S. telecommunications firm AT&T announced that it would increase its quarterly dividend. Shares of AT&T were slightly lower on Friday afternoon, trading with heavy volume after its board of directors approved a 2.2% increase in the company's quarterly dividend.
The quarterly dividend rate was increased to 47 cents from 46 cents a share on a quarterly basis, or an increase to $1.88 from $1.84 per share on an annualized basis. The dividend will be payable on February 2nd, 2015 to common stockholders of record on January 9th, 2015
Separately, traders are watching the government's auction for wireless airwaves closely and may be betting that AT&T will take on more debt than initially expected, which looks risky as competition weighs on industry margins, the Wall Street Journal reported.
AT&T (December 15th – 19th, 2014)
Analysts noted that AT&T was exhibiting a lot of strength in its stock. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give traders a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. Analysts feel these strengths outweigh the fact that the company has had less than desirable growth in net income.
As AT&T continues to generate slow, but steady growth, analysts believe the stock can move up toward $36 in the new year, in addition to the receiving nearly $2 of dividend income.
For the week, AT&T’s stock reached a weekly high of $33.70 on Friday after the stock experienced a weekly low of $32.05 on Monday.
On Monday, December 15th the Empire Manufacturing Survey will be released while U.S. housing starts will be announced on Tuesday, December 16th. On Wednesday, December 17th, the consumer price index will be released in the U.S. while U.S. jobless claims will be announced on Thursday, December 18th. With only a few weeks left in 2014, if jobless claims are going down this would be a positive sign for the U.S. economy and should cause indices to rise in response.
As we head into the final couple of weeks of 2014, most market participants seem pretty positive about how markets have performed overall. If stocks and indices can close the year off on a high – despite the drama around the declining price of oil – hopefully this will be a record year for most economies across the globe. In the next couple of weeks, all eyes will be on the price of oil and any economic data that’s set to be released.
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