Top 10 News Items 12/21-12/24: Yield Curve Hits Record, Senate Pass Healthcare Reform, Existing Home Sales Jump While New Home Sales Drop
Here is a recap of the top news items from this week on Wall Street:
1. The Treasury yield curve, or the relationship between the rate on short term and long term government debt, rose to a record high this week, signaling that traders see the economic recovery fueling inflation. It could also signal that the investors see demand for the record levels of government debt diminishing and are demanding higher prices for longer term paper. On Monday, the difference between 2-and 10-year Treasury note yields increased to 282 basis points.
2. On Friday, the US Senate passed its version of a healthcare overhaul plan that will effectively extend insurance coverage to 30 million-plus American citizens. In a 60-39 vote, regulators moved the process one step further along the process; with the House passing its version on November 7, Congressional leaders will meet shortly after the first of the year in order to hammer-out a compromise package.
3. On Tuesday November's existing home sales were reported up 7.4 percent, bringing the annual pace to 6.54 million. Home resales for the month of November surged to the highest level in nearly three years, as the government backed stimulus program has worked to bring the housing market back from its collapse during the recession. Later in the week New home sales showed an unexpectedly drop in November to 355,000, which compares to the consensus of 438,00. The commerce Department data released Wednesday showed that the sales of new homes fell 11.3 percent, versus the consensus of a 1.7 percent rise. The sales were at the lowest levels since March.
4. Personal income rose by 0.4 percent last month, bolstered by a $16.1 billion rise in wages and salaries. The slightly better unemployment numbers last month also impacted personal income. Economists were looking for a rise of 0.5 percent in personal income. The rising incomes helped improve consumer spending, which increased by 0.5 percent in November. Consumer spending accounts for 70 percent of economic activity.
5. Durable goods orders improved by 0.2 percent last month, compared to the economist forecast of 0.5 percent. Excluding transportation the durable goods sector grew by 2 percent, ahead of the expected 1.1 percent growth. The weak demand for aircrafts and automobiles offset the strength in a number of other areas as orders for durable goods increased in November.
6. Sanofi-aventis (NYSE: SNY) announced an agreement to acquire Chattem, Inc. (Nasdaq: CHTT) for $93.50 per share in cash, or approximately $1.9 billion. Chattem's makes well known brands including Gold Bond, Icy Hot, ACT, Cortizone-10, Selsun Blue and Unisom.
7. The VIX, or Market Volatility Index, has sunk to lows not seen since the end of August last year. The fear index, as it is sometimes referred, crossed below 20 this week.
8. Talk was hot and heavy this week that Apple (Nasdaq: AAPL) will soon announce its highly-anticipated tablet. Reports suggested that Apple (Nasdaq: AAPL) could hold a special event in January to announce the new device.
9. This past weekend, just in time for the large retail volume day Super Saturday, a large storm hit the Northeast, which dropped six inches to 24 inches of snow from North Carolina to Massachusetts. Because of the weather some shoppers put-off purchases, while others jumped to the web to get their last minutes gift. Amazon.com (Nasdaq: AMZN) was seen as the beneficiary from the move to the web.
10. Driving users mad, Research In Motion's (Nasdaq: RIMM) popular BlackBerry smart phone had two major outages to its e-mail service.
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