U.S. stocks were little changed, with the Standard & Poor’s 500 (CME:SPH14) trimming a weekly gain, after benchmark indexes rallied to all-time highs yesterday amid optimism over the economic recovery.
The S&P 500 fell less than 0.1% to 1,841.46 at 4 p.m in New York. The gauge added 1.3% in the holiday- shortened week.
“A year-end rally like this is not usual, but we have to keep in mind trading volumes are light and corporate news is certainly sparse this week,” Robert Landry, the San Antonio- based executive director and money manager at USAA Investments, said by telephone. His firm oversees about $59 billion. “You can’t read too much into the market’s move. It’s somewhat of a Santa Claus rally and perhaps that’s attributed to some portfolios managers in the office making some year-end moves.”
The S&P 500 has advanced 29% in 2013, putting it on course for its biggest annual rally since 1997. The equities benchmark has gained 2% so far this month. December has been the second-best month for U.S. equity returns, according to data compiled by Bloomberg that starts in 1928. The average gain for the month is 1.5%, more than twice the overall monthly mean of 0.6%. The last December retreat for the S&P 500 was in 2007.
The Federal Reserve, which has made employment creation a determinant factor of its monetary stimulus, said on Dec. 18 that it will reduce the pace of bond buying amid faster-than- estimated economic growth. Three rounds of stimulus, known as quantitative easing, have sent the S&P 500 as much as up 172% from a 12-year low in 2009.
“I don’t see why stocks can’t have a reasonable year in 2014, given that the global economy does seem to very slowly improve and Fed has started a tapering program,” Landry said. “There are some things in place to suggest it could be a decent year for stocks but not on the magnitude we’ve seen this year.”