Santa Claus Rally Arrives
The U.S. equity markets finished out the last full trading session for the year in this holiday-shortened week solidly higher on the heels of a flood of mostly upbeat economic data, and as a jump in crude oil prices on a bullish inventory report gave energy stocks a boost. Volume was on the lighter side as traders prepare for a shortened session tomorrow and as the U.S. and most international markets will be closed on Friday in observance of the Christmas holiday. Treasuries were lower, as was gold, while the U.S. dollar was higher. Earnings results dominated a fairly quiet day in equity headlines.
The Dow Jones Industrial Average (DJIA) jumped 185 points (1.1%) to 17,602, the S&P 500 Index rallied 25 points (1.2%) to 2,064, and the Nasdaq Composite advanced 45 points (0.9%) to 5,046. In moderate volume, 825 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq. WTI crude oil jumped $1.36 to $37.50 per barrel and wholesale gasoline added $0.07 to $1.24 per gallon, while the Bloomberg gold spot price declined $2.83 to $1,069.60 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 98.35.
After the closing bell yesterday, Dow member NIKE Inc. (NKE $129) reported fiscal 2Q earnings per share (EPS) of $0.90, topping the FactSet $0.86 estimate, while revenues rose 4.1% year-over-year (y/y) to approximately $7.7 billion. The company announced a two-for-one split of both NIKE Class A and Class B common stock on November 19, and expects its common stock to begin trading at the split-adjusted price tomorrow. As the common stock is not yet trading on a post-split basis, the above per share amounts are presented on a pre-split basis. NKE offered Q3 guidance growth that was viewed as solid for the top-line, but its gross margin is expected to be down as the company clears through excess inventory in North America. Shares of NKE gave up early gains and were lower.
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