Santa Rally Can't Undo S&P's '1931' Slide
Bob Pisani is out today. CNBC Producer Robert Hum wrote this blog.
Who said there’s no Santa Claus? The markets appear to be showing a bit of a Santa rally so far this year. Since the close on Dec. 23, the S&P 500 has rallied 3.5%. According to the Stock Trader’s Almanac, since 1950, the S&P has averaged a 1.5% gain during the last 5 days of December and first 2 days of January. However, despite this year’s Santa Claus rally, the S&P is still down 39%, its worst decline since 1931.
The markets have opened slightly higher on their final day of trading this year. Industrials, techs and retailers lead the way, while some of the big financials are showing some early weakness.
Weekly jobless claims fell 94,000 — much more than expected, but many attribute the steep drop to seasonal factors. Despite the decline in claims, its current level of 492,000 is 45% higher than it was at the same time last year. Continuing claims also rose to 4.51 million, its highest level since 1982.
In other news:
The Wall Street Journal reports that the Netherlands-based chemical maker LyondellBasell is weighing bankruptcy options.
Last year, Basell acquired Lyondell Chemical for $12.7 billion, a 20% premium, creating a large debt burden for the new company. Furthermore, as with many other chemical companies in the past year, LyondellBasell was plagued by high raw material costs as commodity prices peaked earlier this summer, and is now faced with slumping demand in sales during the current economic downturn.
Trading up 20%, Puget Energy is the NYSE’s biggest gainer today. The Washington State electricity provider received approval from state regulators to be sold to an investor group led by Australian bank Macquarie. The deal, which was announced back in October, has a price tag of $7.4 billion or $30 per share.
Yesterday after the close, the Fed confirmed that it would begin purchasing mortgage-backed securities backed by Freddie Mac , Fannie Mae , and Ginnie Mae beginning early next month. As it announced last month, the Fed intends to buy $500 billion dollars in mortgage-backed securities by the middle of 2009 to help lower mortgage rates and increase lending.
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