EBay rises on Cyber Monday hopes after mixed results from shopping weekend
NEW YORK (MarketWatch) — U.S. stock indexes traded near unchanged Monday, making up losses in the wake of a stronger-than-expected reading on November manufacturing activity thatreinforced expectations the Federal Reserve will move sooner rather than later to trim its bond-buying program.
Cyber Monday and December deals: Buy it or wait?
Brent Shelton, FatWallet.com’s online shopping expert, discusses how to shop smart on Cyber Monday and keys to smart online shopping for the remainder of the holiday season. Photo: Getty Images.
Stocks enter the final month of the year on a tear, with the S&P 500 up nearly 27% for 2013. The S&P and the Dow have both set a string of record highs over the course of the year, with pullbacks tending to be shallow and far between.
While that has some investors fearing a potential bubble, others argue that the rally appears to be in strong hands.
“The fact that the market refuses to pull back is a subtle and very important testament to how strong the bulls are,” said Adam Sarhan, chief executive at Sarhan Capital, in a phone interview.
Typically, markets either follow a strong run-up by consolidating or pulling back to digest the move, he said. Of the two scenarios, consolidation is the stronger signal.
Meanwhile, investors were taken by surprise early Monday when the Institute for Supply Management said its manufacturing index rose to 57.3% in November from 56.4%, its highest reading since April 2011. Economists surveyed by MarketWatch had forecast a reading of 55%. A reading above 50% indicates an expansion in activity.
“Given the relationship between the index and broader growth and given its statistical reliability, our view that growth will pick up in coming months is validated by today’s data point,” said Dan Greenhaus, chief global strategist at BTIG, in a note.
Stronger growth can weigh on stocks by boosting expectations the Federal Reserve will be more eager to begin scaling back the size of its bond-buying program, even though central bank officials have largely taken pains to emphasize that official interest rates are likely to remain extraordinarily low for years to come.
Earlier, the market posted little reaction when the Markit final purchasing managers index for November came in at 54.7, up slightly from a 54.3 preliminary reading.
Among blue chips, 3M Company (NYSE:MMM) fell more than 4% to be the largest decliner, undercut as analysts at Morgan Stanley cut their rating on the stock to underweight.
Online auction site eBay Inc. (NASDAQ:EBAY) was among the top gainers on the S&P 500, rising more than 2% on expectations for a strong Cyber Monday, traditionally the biggest online shopping day of the year. Online retailer Amazon.com Inc. (NASDAQ:AMZN) was virtually unchanged despite attracting loads of attention over the weekend when it revealed it will test the use of drones for rapid delivery of its orders.
Meanwhile, shopping results from Thanksgiving Day, Black Friday and the weekend offered mixed results. A survey by the National Retail Federation indicated more shoppers hit the stores and Web sites compared to the same period last year, but spent nearly 3% less money.
“Wednesday’s non-manufacturing ISM employment index, together with the ADP survey remain the key releases in advance of payrolls, and other labor data,” Carnell said, in a note. “But with the backdrop for labor demand looking robust, according to ongoing declines in initial claims, Friday may re-encourage thoughts of a December-January taper amongst market participants.”
“Whether it does the same to Janet Yellen, Ben Bernanke and the rest of the FOMC is another question, however,” he added.