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Rough Start to 2014

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Rough Start to 2014

Weaker than expected volume, due to the shortened holiday week, was compounded by a snow storm that blanketed much of the US northeast coast. Volumes will likely return on Monday as traders return from holiday. Stocks in the US started the trading session flat, as stronger than expected US data released on Thursday failed to buoy the equity markets. Sentiment changed quickly in the New Year with traders selling winning positions, immediately after the tax season changed. Weaker than expected Chinese PMI data was also a catalyst for Thursday’s unwelcome performance. Stocks settled mixed on Friday with the Dow in the black and the S&P 500 along with the Nasdaq composite in the red.

China’s services sector growth eases, somewhat mimicking the weaker than expected manufacturing data released on Thursday. China’s official services PMI fell to 54.6 in December from 56 in September, providing further evidence that the country’s economy is losing steam again. The sub-index for business expectations dropped to 58.7 from 61.3, while new orders remained at 51.

Thursday’s release of construction spending figures, as well as, the prior week’s estimate of advanced retail sales is likely to boost estimates for Q4 US GDP from around 2.0% toward 2.5%. The Commerce Department reported that November construction spending to an annual rate of $934.4 billion.

In corporate news, target faces financial services class-action suit over breach. Alabama State Employees Credit Union has filed a class-action suit against Target (NYSE:TGT) over the pre-Christmas credit card breach that compromised over 40 million payment cards.

Toward the end of the trading session, investors needed to absorb new bullish comments from Ben Bernanke. The Chairman again stated that rates would remain low despite the tapering of bonds, and could remain there for the foreseeable future.

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