By Anora Mahmudova and Carla Mozee, MarketWatch Russell 2000
rises 1.2%
NEW YORK (MarketWatch) -- The S&P 500 and Dow Jones
Industrial Average closed at record levels on Monday, but it was
the small-caps and the Nasdaq Composite who stole the show.
Small-caps rallied and outperformed their large counterparts, in
a sign that the current bull market has not run out of steam yet.
Trading volumes were lower than usual, as the week is cut short by
Thanksgiving holiday on Thursday.
The S&P 500 (SPX) closed 5.91 points, or 0.3%, higher at
2,069.41, the 46th time it closed at record level this year.
Consumer discretionary and tech sector stocks led the gains. The
heaviest-weighted company on the index, Apple, Inc. rose 1.9%,
helping lift the benchmark.
The telecom sector was the weakest of the S&P 500's 10
sectors on Monday, as investors expressed concern over rising costs
and increasing competition.
The Dow Jones Industrial Average (DJI) dipped in an out of
negative territory but closed marginally higher, adding 7.87 points
to 17,817. The blue-chip index hit a record high for the 29th time
this year.
Monday trading also saw small stocks outperform large-cap
stocks. The Russell 2000 (RUT) rose 14 points, or 1.2% to 1,186.22,
while the Nasdaq Composite (RIXF) ended the day up 41.92 points, or
0.9%, at 4,754.89, thanks to a rally in biotechnology sector
stocks.
John Manley, chief equity strategist at Wells Fargo, cautioned
not to read too much into market moves this week, ahead of
Thanksgiving holiday.
Speaking about the market's run in 2014 and valuations, Manley
said that stocks are fairly priced given earnings expectations for
the S&P 500 next year are at $125-130 per share.
"Big bull markets end with irrationality - when all the people,
who lost out on the rally decide to join in. We do not see that
yet, as there is still a lot of cash on the sidelines," Manley
said.
The economic calendar is thin on Monday, but later in the week,
investors will receive a stack of updates on housing, inflation and
a revision in third-quarter gross domestic product for the U.S.
Need to know: Relax, stocks will rise only 5% next year
OPEC spotlight: Energy stocks also rose ahead of Thursday's
meeting of the Organization of Petroleum Exporting Countries, where
members are facing calls to cut production to counteract the recent
slide in crude-oil prices. Ahead of Wall Street's open, light,
sweet crude futures for January delivery (CLF5) turned lower, but
remained above $76 a barrel, which until recently represented a
four-year low for the price of oil.
"Plenty of headwinds to OPEC action remain, but we see greater
prospects for either a stronger enforcement of the quota or an
outright cut of the quota," said Morgan Stanley commodity analysts
led by Adam Longson, in a Monday note.
A rising likelihood that a Monday deadline on an agreement to
curb Iran's nuclear program will be extended may factor into
decisions at OPEC, "but even last week, Libya called for stronger
enforcement of the existing 30 mmb/d quota, and most oil exporters
are calling for at least some action to settle oil markets," said
Morgan Stanley.
Stocks to watch:Apple Inc. (AAPL) shares jumped 1.9% after
Susquehanna raised it price target to $135 from $120.
The two top gainers on the S&P 500 were Urban Outfitters,
Inc and Gap, Inc. surging 5.4% and 4.6% respectively.
Tesla (TSLA) shares rose 1.6% after news that the car marker was
in talks with German automaker BMW about working together to
develop batteries and collaborate over light-weight parts.
Diversified industrial conglomerate United Technologies Corp.
(UTX) said Chairman and Chief Executive Louis Chenevert will
retire, effective immediately, after 22 years with the company.
United Technologies also affirmed its 2014 per-share earnings and
sales outlooks. Shares slid 1.4%.
Trina Solar Ltd. (TSL) shares fell 5.2% after the company posted
flat profit on revenue growth of 13% for the third quarter.
For more about today's movers, read our regular Movers &
Shakers column.
Other markets: European stocks which rallied after the release
of Germany's IFO business-climate survey, pared gains, but still
closed slightly higher. The Hang Seng and Shanghai Composite
indexes each leapt nearly 2% in a first chance to react to China's
rate cuts. Read Craig Stephen's column on whether investors should
buy into China's rate-move.
Gold futures (GCZ4) was mostly unchanged at $1,196 an ounce, and
the dollar(USDJPY) topped Yen118.
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