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Markets Continue 8th Week of Rally

Markets continued the rally through the holiday-shortened week, giving the S&P 500 and Dow their eighth straight week of gains. Markets are up for the third month in a row, leading to hopes for a great close to the year. For the week, the S&P 500 gained 0.06%, the Dow grew 0.13%, and the Nasdaq rose 1.71%.[1]

Expectations about holiday retail numbers may have driven some of the action. Though we don’t have solid numbers for Black Friday yet, the National Retail Federation estimates that approximately 140 million shoppers hit U.S. stores over the Thanksgiving weekend, slightly more than the 139 million that turned out last year. Retail industry research firm ShopperTrak estimated that traffic at brick-and-mortar stores increased 2.8 percent and some online retailers report record traffic through the weekend.[2]

Holiday shopping accounts for about 20% of retailer sales for the year, which puts the pressure on to get consumers through the door. 2013 is unusual because there are fewer shopping days – less than 30 days between Thanksgiving and Christmas – and retailers are slashing prices to attract shoppers.[3] While it’s hoped that these efforts will bring in more business, it could have significant effects on retailer margins.

This week will be packed with data as investors hunt for fresh clues about whether the Fed may taper after its mid-December meeting and whether markets can support the rally. At the forefront of everyone’s mind will be another estimate of third-quarter GDP and the November jobs report. The employment situation is a major factor in Fed deliberations and traders will attempt to channel the Fed when interpreting the data. Volatility can be expected and disappointing data could very well lead to a pullback as investors take profits and wait for better news.

ECONOMIC CALENDAR
Monday: PMI Manufacturing Index, ISM Mfg Index, Construction Spending
Tuesday: Motor Vehicle Sales
Wednesday: ADP Employment Report, International Trade, New Home Sales, New Home Sales, ISM Non-Mfg. Index, EIA Petroleum Status Report, Beige Book
Thursday: GDP, Jobless Claims, Factory Orders
Friday: Employment Situation, Personal Income and Outlays, Consumer Sentiment

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the DJCBP. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

HEADLINES

Gold suffers worst month since 1978. Gold prices took their worst monthly tumble since November 1978 as the stock market rally put pressure on the precious metal.[4]

Greek debt upgraded. Moody’s, the international ratings agency, upgraded Greek debt to reflect the country’s progress on fiscal reform. Though the upgrade – from Caa3 to C – still leaves Greek bonds in junk territory, it may bolster confidence that Greece is on the rebound.[5]

Chinese factory growth at 18-month high. China’s factory growth remained unchanged in November, clinging to a multi-year high on strong domestic and foreign demand. Analysts had expected growth to decelerate and were surprised by the signal of strength in one of the economy’s biggest sectors.[6]

U.S. consumer sentiment rises in November. While lower income households are still worried about jobs, stock market gains have boosted the optimism of high income Americans. Higher consumer confidence will boost hopes of a solid holiday shopping season.[7]

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[1] http://briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-november-25-2013.htm

[2] http://www.reuters.com/article/2013/12/01/us-usa-retail-shoppertrak-idUSBRE9B000020131201

[3] http://www.reuters.com/article/2013/11/29/usa-stocks-weekahead-idUSL2N0JE12H20131129

[4] http://www.cnbc.com/id/101235384

[5] http://www.cnbc.com/id/101236486

[6] http://www.cnbc.com/id/101236576

[7] http://www.reuters.com/article/2013/11/27/us-usa-economy-sentiment-idUSBRE9AQ0RI20131127

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