Weekly Market Commentary:

The Federal Reserve held interest rates steady as anticipated and combined with a 1% increase in November retail sales was enough to send stocks into an end of the week rally. The Dow Jones Industrials finished the week at a record high, rising 138 points (1.1%) to close at 12,446, up 16% on the year. The S&P 500 added 17 points (1.2%) to close at 1,427, its highest level since November of 2000.

In OTC action, the Nasdaq Composite lost its leadership role while adding only 20 points (0.8%) ending the week at 2,457 up 11% on the year. The Russell 2000 still leads the popular averages gaining 18% on the year thus far, but was relatively flat last week ending at 793. Large cap names appear to be gaining more momentum while the tech heavy Nasdaq and small cap Russell index appear to be losing steam.

Oil prices continued to edge higher as they have in three of the last four weeks, while inflation continues to appear to be under control at least for now. A lack of pressure in consumer prices combined with growing industrial production was just the kind of information the bulls wanted to hear, and also helped stocks vault to record heights last week.

In the week ahead, Tuesday's wholesale price report will be closely watched for additional inflation clues, with producer prices expected to rise a modest 0.4% in November. Housing starts are expected to jump 6%, which would be widely seen as offsetting October's dismal 15% plunge. Thursday, revised third quarter GDP growth is expected to remain at 2.2%, while Fed inflation hawk Jeffrey Lacker (Richmond Fed President) discusses his economic outlook in Charlotte NC.

The week will end with personal income expected to rise 0.4% in November, which would match October's gain, and durable goods orders expected to post a modest November gain of 1%. The bond market will close early (2 pm EST) on Friday ahead of the Christmas holiday next Monday. All in all, it looks like another week much like the last one, with stocks likely drifting higher. With momentum appearing to flag, it will remain to be seen when this latest rally will conclude, but certainly time will tell.

Stay tuned!

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