Riskier assets bounced today as investor’s fears about Greece debt, Beranke reappointment and China rate increases ebbed. The S&P 500 index increased in value by 5 points to 1097. Crude Oil rallied $1 per barrel to $75.28, and the Euro and GBP both increased against the dollar.
On the economic front, there was some interesting housing data for the market to absorb. Existing-home sales plunged in December, dropping lower than expected after three straight increases that were fed by the US government tax credit. Home sales on existing houses fell by 16.7% to a 5.45 million annual rate from an unrevised 6.54 million in November, according to the National Association of Realtors. On the positive side of the report, inventories of homes shrank, and prices rose year over year for the first time in more than two years. The main culprit for the drop in sales was the expectation that the home buyer’s tax credit would not be renewed in December. Economists surveyed expected an 11.6% decrease in sales during December, to a rate of 5.78 million. Before the big drop last month, sales had gone up three straight times. For all of 2009, there were 5.16 million home sales, up 4.9% from 4.91 million in 2008. It was the first annual sales gain since 2005. November 2009 existing-home sales rose an unrevised 7.4%.
The news on home is not positive, but it did not seem to put a dent in the small rally in the equity markets. The S&P 500 was not able to regain its 50 day moving average, which probably means investor will sell against this level, until there is a close above it.
