New highs on Wall Street, but little momentum evident

Key psychological levels have been broken by the Dow and S&P today, with optimism over the Fed’s stimulus continuing to fuel the rise.

Two key levels have been breached for the first time today: the Dow Jones broke through 16,000 and the S&P 500 went above 1800. The market has not surged though, instead making only modest gains. While the Dow has held the ground above 16,000, the S&P 500 quickly dipped back below into the 1700s.

By early afternoon in New York, the Dow was up 0.30% or 47 points at 16,009 and the S&P 500 stood at 1799.7, a gain of 0.09%.

New intraday highs were struck shortly after the open on Wall Street, before diving to the lows of the day after the release of the National Association of Home Builders’ Housing Market Index for November, which showed no change from October’s downwardly-revised level of 54.

This report has now failed to show a gain four times in a row; although current sales are still showing strength, this appears to be driven by buyers at the high end of the market, with traffic of prospective buyers looking decidedly weak with a sub-index level of 42.

New York Fed President William Dudley is speaking on the economy today. ‘While growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015,’ he said, adding that, ‘As growth picks up, I expect to see more substantial improvement in labor market conditions.’

These comments have done little to alter expectations for the Fed’s asset purchases to continue at $85 billion per month well into next year, and that is hurting the dollar. EUR/USD gained 0.09% to 1.3508.

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