Mon November 30, 2009

Market Commentary:

The U.S. stock market closed higher on the first full trading session after the Dubai news broke late last week. On Friday stocks sold off as investors unloaded their positions ahead of the the weekend. Advancers led decliners by a 11-to-8 ratio on the NYSE and were about even on the Nasdaq exchange.  As expected, volume totals were heavier than Friday’s holiday-shortened trading session. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed by a small margin on the Nasdaq exchange.

Buyers Emerge In The Final Hour As Dubai Woes Ease

Stocks spent most of the session in the red but buyers showed up in the final hour which helped the major averages close higher on the day. Monday was the first full trading session since the Dubai news spread late last week and it was encouraging to see the major averages rally as concerns continue to ease regarding the possible default of Dubai World. Dubai World said that it is currently engaged in “constructive” initial talks with its lenders to restructure about $26 billion of debt. At this point, the world is beginning to accept the notion that Dubai World is an isolated incident and it will most likely be bailed out by one of its wealthy neighbors. Since no one knows for sure exactly how much debt is at stake, most investors believe that the total debt is under $100 billion (highest estimates). If that is the case, it is only a “blip” on the world’s economic radar. More importantly, if Dubai is bailed out then it will become a moot issue.

U.S. Dollar Falls:

The U.S. dollar fell on Monday which helped stocks and a slew of commodities. The Chinese government reiterated its stance regarding its stimulus package after India announced its economy grew at a very healthy rate of +7.9%, which topped estimates. The National Retail Federation released a report that showed that holiday traffic was up from the same period last year but the average shopper spent $343.31 in stores and online over the Thanksgiving holiday weekend, less than the $372.57 spent last year.  The group reaffirmed its forecast for a -1% decline in spending for this holiday season.