The S&P 500 is on track for its best weekly gain since July, but if history is any indication, those gains may evaporate on Monday.» Read More
The latest employment figures show the economy added 203,000 jobs in November, while the unemployment rate dropped 30 basis points to 7 percent, the lowest level in five years.
Economists expected the jobs numbers to increase by 180,000 and unemployment to dip by 10 basis points.
With a downtick in the unemployment rate, the labor force participation rate, a measure of both people who are working and those who are actively looking increased by 20 basis points to 63 percent, it's highest level in more than a year. The 30-year average stands at around 65.8 percent.
At the same time, the employment-population ratio, which measures the percentage of adults over 16 who have a job also increased by 30 basis points to 58.63, the biggest such increase since September 2012.
The Federal Reserve pledged to keep interest rates low until the unemployment rate drops to 6.5 percent or lower, as long as inflation remains near the 2 percent target.
The current downward trajectory of the unemployment rate may now provide a catalyst for the Fed to put the brakes on its historic expansion of monetary policy by tapering its massive bond-buying program initiated more than five years ago.
Below is a look at where the most jobs are being added. Education and health services had the largest increase, adding 40,000 jobs last month.
A strong sell bias continues among company insiders across the market, as stocks breach trough historic levels.
The S&P 500 is up 26 percent year-to-date, tracking for its best yearly gain in a decade. Other market indexes such as the Nasdaq, Russell 2000 and Dow transportation average are up more than 32 percent this year, respectively. The S&P, Dow, Russell and transports are trading at or near record highs, while the Nasdaq crossed the 4,000 mark for the first time in 13 years.
As the market continues to gain steam, corporate insiders are unwinding their positions at a similar rate. Research firm InsiderScore highlights that the sentiment being displayed is not surprising given the market backdrop along with tax season approaching, but emphasizes that investors should not lose sight of the trend and continue to drill down on individual companies.
If history is an indication, the stock market could extend its rally into December.
U.S. stocks finished the shortened-holiday week with another gain, up for eight consecutive weeks. The S&P 500 set its longest winning streak in nearly 10 years, while it was the Dow's longest consecutive weekly increase in three years. Both indexes are up 6.8 percent and 6.7 percent, respectively, in that period.
Since the 1900s, December is the best month for the Dow, and second-best month for the S&P 500 and Nasdaq. Historically, all three indexes have gained on average between 1 and 2 percent, respectively.
Even with the sharp gains in stock prices this year, 70 percent of the Dow components still offer dividend yields greater than 2 percent.
Thirteen of the 30 companies in the Dow have dividend yields greater than the 10-year U.S. Treasury, which was yielding around 2.7 percent Tuesday. The current average dividend yield of the Dow stands at 2.52 percent as companies kept pace with stock prices by raising dividends, but the average is down about 40 basis points from the beginning of the year.
Since then, the Dow is higher by about 3,000 points, which has pushed yields lower.
"Investors need to be cautious and look at valuations along with dividend yields," says Art Hogan, Chief Market Analyst at Lazard Capital Markets. "I expect the market to continue its run, and potentially rise another 12 percent next year, but I am still focused on fundamentals."
The Dow Jones Industrial Average is up nearly 23 percent year-to-date, on pace for its largest gain in a decade. The Dow, closed at a record 16,072.54 Monday, scoring its 42nd record close this year.
Hogan also favors stocks over bonds, and highlights that with corporate cash on balance sheets at record levels, the trend in capital distribution in the form of dividends and stock buybacks should continue. Companies, using record low bond yields to issue debt, have been using the proceeds to issue dividends and buy back stock.
Twenty-four Dow members, or 80 percent of the index, increased their dividend payments so far this year, according to figures by S&P Capital IQ. Some of those names include: Verizon, 3M, American Express, Caterpillar, Chevron, Cisco, among others.
But as Hogan highlights, investors shouldn't worry about just chasing yield and should first make sure the underlying fundamentals justify the price.
For Wall Street, it turns out that Thanksgiving week is as much about bulls as turkeys.
On average, over the past two decades, all three major stock indices finished up in the three days before Thanksgiving. But the gains didn't stop there. Historically, stocks have risen on Black Friday and all the way through to Christmas.
In fact, the S&P 500 posted the largest average gain in the three days before Thanksgiving, while the Nasdaq tends to lead in all the other periods.
Despite the government shutdown last month, the latest employment figures show the economy added 204,000 jobs in October, an increase of 56,000 month over month, while the unemployment rate rose to 7.3 percent.
Economists expected the numbers to increase by 120,000.
With an uptick in the unemployment rate, the labor-force participation rate, a measure of both people who are working and those who are actively looking fell by 40 basis points to 62.8 percent, it's lowest level in more than three decades. The 30-year average stands at around 65.8 percent.
At the same time, the employment-population ratio, which measures the percentage of adults over 16 who have a job also decreased by 30 basis points to 58.3, the lowest it's been since July 2011.
Silicon Valley is booming, and the Chinese are starting to cash in on the region's housing craze.
With tech stocks surging and IPOs sprouting up left and right, the area is in the midst of a real estate bonanza that's attracting a wave of buyers from China.
The average price of a home in Silicon Valley has surged more than 27 percent over the past two years, according to home purchase data from Santa Clara County.
Technology executives, budding entrepreneurs and venture capitalists are putting their money to work in the Silicon Valley real estate market, and they are finding new competitors from around the world, especially from China.
Ken DeLeon—named by The Wall Street Journal as the country's most successful real estate agent—said he has done close to $300 million in sales this year and that the market has never been hotter.
DeLeon said that in the past year he has sold more than 20 luxury residences in the Palo Alto area to buyers from mainland China, Taiwan and Hong Kong. Most of those buyers are looking for houses in the $2 million-plus range, he said.
The current rally, which has sent the S&P 500 up nearly 24 percent this year, is on track to be the best in a decade. And based on historical statistics, odds are in favor of a higher year-end.
Since 1950, the market has risen more than 20 percent in the first 10 months of the year only four other times. In each instance, the S&P closed the year with a gain of at least 1.29 percent in the last two months.
Going back to 1929, the number of occurrences increases to 12 (10 of them before 1990), and the S&P finished the year with additional gains 83 percent of the time. (It was flat once, in 1938, and negative in 1943.) The average gain in November and December combined stands at 4.79 percent.
While past history does not guarantee future performance, the pattern suggests that the rally may not be over.
Some stocks that investors had given up for dead are defying the norm and finding new life in the current rally.
First Solar, for example, is up 63 percent in 2013, after posting a loss for five consecutive years. In fact, the stock is still off by 84 percent from its record price of $317 back in May 2008.
Another solar name that has made a comeback is SunPower. The stock is up 347 percent year-to-date—also on track to break a five-year losing streak in which it plunged 96 percent.
Both of those names are heavily shorted. First Solar has short interest of 17 percent, while SunPower has a short ratio of 28 percent.
Sanjay Shrestha, an analyst with Lazard Capital Markets covering alternative energy, cites improved profitability and cash flow in recent years for the strong performance.
"Strong demand in multiple new markets is driving ongoing cost reductions and fueling a resurgence in the solar industry," he said.
Another name pretty much given up on is RadioShack. After plunging nearly 89 percent in the past two years, shares are up 33 percent this year, trading at about $2.81.
Despite the S&P 500's rising 23 percent and the Nasdaq 100's surging 28 percent this year, many of their components haven't been able to join the rally.
Are these the new zombie stocks?
With stocks near all-time highs, investors are taking on record levels of margin debt, something that could accelerate a decline if the market turns south.
Margin levels, or the amount borrowed to purchase securities, climbed to a new record of $401 billion in September, according to NYSE Euronext data released this week. The monthly increase of 4.78 percent was also the largest gain since January. The NYSE figures represent the margin accounts of member firms.
"Investors love going on margin in a rising market environment, but when the market declines, it can be extremely painful" says Paul Hickey, co-founder of Bespoke Investment Group. "Don't forget that if you go on margin you also have to pay interest on that loan, and some brokers charge pretty high rates, so you are already starting in the hole."