The Dow Jones Industrial Average (DJI) rocketed higher right out of the gate, as U.S. politicians expressed confidence in a "fiscal cliff" aversion. Meanwhile, a double-dose of solid data from the housing sector added fuel to the bulls' fire, helping the major market indexes to their best session in two months.
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The Dow Jones Industrial Average (DJIA) got off to a great start, jumping triple digits at the opening bell. What's more, the blue-chip barometer muscled higher through the final hour of trading, advancing 207 points, or 1.7%, to topple its 10-day moving average for the first time in nearly two weeks. In fact, not one of the Dow's 30 components ended in the red; Bank of America (NYSE:BAC) paced the advance, tacking on 4.1%.
Likewise, the S&P 500 Index (SPX) extended its climb as the session progressed, gaining 27 points, or 2%, to end north of its 200-day trendline for the first time since Nov. 7. Faring even better, the Nasdaq Composite (COMP) finished almost 63 points, or 2.2%, higher, conquering its 10-day moving average for the first time since Nov. 6.
The CBOE Market Volatility Index (VIX), on the other hand, gapped more than 7% lower, breaching its 80-day trendline -- and the 16 level -- for the first time in more than a month.
A Trader's Take
"The market experienced a lot of follow-through buying from Friday's strong close, as more and more market participants become convinced that U.S. fiscal cliff discussions are making progress," said Schaeffer's Senior Equity Analyst Joe Bell. "The risk-on trade was out in full effect, as technology and materials stocks led the way and utilities stocks were the clear laggards."
In fact, he added, "This was our best-performing day in months, so it was a nice break from the constant selling we've experienced during the past several weeks. Beneath the fiscal cliff talk and progress being made in Greek debt discussions, we actually had better-than-expected home sales data released today. This is a good sign for one of 2012's top-performing sectors."
Economic and Earnings News
Existing-home sales rose 2.1% in October to a seasonally adjusted annual rate of 4.79 million, the National Association of Realtors (NAR) reported, compared to a downwardly revised annual rate of 4.69 million in September. Economists, on average, were anticipating a rate of 4.8 million for October. On a year-over-year basis, existing-home sales are up 10.9%, while the median existing-home price is up 11.1% at $178,600. Inventories declined 1.4% to 2.14 million units in October -- the lowest since 2006 -- which is pressuring home prices, according to the NAR.
Homebuilder sentiment increased for a seventh straight month in November, touching a six-year high. Specifically, the National Association of Home Builders/Wells Fargo housing market index rose 5 points to a seasonally adjusted level of 46, marking the loftiest level since May 2006. The sentiment gauge has more than doubled in the past year, as it stood at just 19 in November 2011.
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