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Wednesday, 1 January 2014

US stocks cap stunning year with fresh records

US stocks powered to fresh records during the last session of 2013, closing out a year of stunning gains that some analysts say could continue in 2014.

NEW YORK: US stocks powered to fresh records during the last session of 2013, closing out a year of stunning gains that some analysts say could continue in 2014.

The new records for the Dow Jones Industrial Average and the broad-based S&P 500 capped the best year for American stocks since the 1990s and confirmed the recovery from the 2008 financial crisis.

Investors repeatedly bid up equities on a cocktail of loose monetary policy, corporate earnings growth and the steadily rebounding economy.

Tuesday's gains, another 0.44 per cent for the Dow and 0.40 per cent for the S&P 500, came on the back of more positive economic data - consumer confidence was bouncing back from a lull and home prices continued to rise

The Dow notched 52 new records during 2013, gaining 26.5 per cent to end the year at 16,576.66. It was the blue-chip index's best one-year percentage increase in more than 15 years.

The S&P 500 advanced 29.6 per cent to 1,848.36, smashing the record barrier 45 times. It was the largest one-year gain since 1997.

The tech-rich Nasdaq Composite, while still well short of its all-time record, closed the year at its best level since the 2000 .com crash, adding 38.3 per cent for the year to 4,176.59.

The vast majority of companies on the S&P 500 - 457 of them - gained for the year, illustrating the broad character of the year's bull run.

"There were not a lot of losers," said Howard Silverblatt at S&P Dow Jones Indices. "This was a very broad market."
2013 "would rank up there as one of the best years in my memory," said Greg Peterson, director of investment research at Ballentine Partners. "It was an extremely good year."

The year's breakout stocks included video streaming company Netflix, which more than tripled in value during 2013, and electric-car maker Tesla, which rose more than four-fold, ending the year amid rumours that it could be taken over by one of the auto majors.

Netflix, along with electronics retailer Best Buy and Micron Technology, were the three biggest gainers in the S&P 500, while Newmont Mining was the biggest faller, down more than 50 per cent as gold prices plunged 28 per cent during the year.

The biggest gainer on the Dow for the year was aerospace giant Boeing, which withstood a bumpy stretch related to its flagship 787 before rallying on strong global demand from airlines.

The only company on the Dow to fall was IBM, which gave up 2.1 per cent amid challenges to the legacy technology giant's business from the new technology leaders.

Changes in index membership underscored the shifts in corporate power. On the Dow, Alcoa, Bank of America and Hewlett-Packard were replaced by Goldman Sachs, Nike and Visa.

The S&P 500 dropped slumping retailer J C Penney, which shed more than 50 per cent of its value, replacing it with social networking company Facebook, which more than doubled in 2013.

Twitter's entry to the market, raising US$1.8 billion, made some of the biggest news during the year. The still money-losing social network power's stock quickly more than doubled from its offer price of US$26 to above US$63 on Tuesday.

Other big IPOs came from hotelier Hilton Worldwide Holdings and oil pipeline operator Plains GP Holdings.
There was confidence among analysts that the bull market would continue into 2014, though many questioned whether the gains of 2013 could be matched.

Key questions concern the pace of the US economic recovery, and especially jobs growth, and how the market absorbs the hit from the Federal Reserve's stimulus cutback.

Another big unknown is whether companies can grow revenues after record profits in 2013, as much of the gains came through cost-cutting.


  1. in this 5-year chart, we can see that both STI and DOW are now at their widest band.

    Unknowingly STI investors have got themselves into two types of traps.

    Kiasi - the greatest market correction is coming

    Greed - during bull run, investors cheong the market because of greed for more profits. During listless market condition, investors waiting at sideline for many months now because of greed to buy at their cheapest.

  2. By: Matt Clinch, CNBC

    Gold's loss of luster in 2013 solidified Tuesday as the precious metal settled 28 percent lower for the year at $1,202.30 an ounce, its worst annual fall since 1981, after investors spent 2013 moving their money into equities.

    And 2014 is not shaping up to be a landmark year for the metal, according to market watchers.

    The price of gold has fallen by 28 percent since beginning the year, when it went for $1,697.70 per ounce. Prices are sharply lower than all-time highs above $1,900 in 2011, when a worsening debt crisis in Europe sparked buying of safe haven assets. Gold enjoyed gains of nearly 30 percent in 2007, 2009 and 2010. In the 10 years up until last December, gold has nearly quintupled, with the help of low interest rates, extra liquidity from the U.S. Federal Reserve, and concerns over the global economy.

    The metal has traditionally had an inverse relationship to interest rates, with demand for the precious metal increasing when rates are low, as they currently are, and is often seen as a hedge against inflation.

    December 2012 was seen as a key turning point for gold prices with the commodity losing its close correlation to Fed policy announcements. On Dec. 12 last year, the Fed announced that it would buy $45 billion in additional Treasurys every month, on top of the $40 billion of mortgage-backed securities it already purchases, taking the total size of its quantitative easing program to $85 billion a month.

    While previous quantitative easing announcements had had a positive effect on the price of gold, the precious metal actually posted a surprise fall of 1 percent on the day of the announcement.

    The sell-off continued in April 2013. Gold saw a sharp drop on concerns that struggling euro zone country Cyprus would have to sell excess reserves of the precious metal to raise about $522 million to help finance that country's $13 billion international bailout.

    Bullion took another hit, falling to a six-month low, on Dec. 20 after the Fed's decision to scale back its bond-buying stimulus prompted another sell-off. A drop in exchange-traded fund holdings showed investors had increasingly lost faith in bullion as a hedge against inflation and as an alternative investment. Many analysts see the buying of physical gold in China and India, which is still relatively strong compared to historic rates, as the only upside for the price.

  3. Ha! Ha!
    i think CW has commented that Singaporeans have all suddenly become Value Investors or something to this effect. There maybe some truth in what he thinks. Singaporeans have became more stock market savvy, lah!?

    1. What made someone a Value Investor?

      Their method of doing some financial ratios analysis and guessworks on business prospecting or their investment outcome?


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