Stocks Finish Modestly Up in Choppy Trading

Stocks eked out small gains in volatile trading today, with the Nasdaq briefly hitting a 14-year high.

The S&P 500 and the Nasdaq also squeezed out small gains. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded above 14.

Meanwhile, the Russell 2000 index earlier hit a new high of 1,183.04, topping its previous all-time record of 1,182.04 reached in mid-January.

Stocks were higher for most of the session, lifted by encouraging news on the housing front. New home sales spiked 9.6 percent in January, jumping to a 5-1/2 year high, to a seasonally adjusted annual rate of 468,000 units, according to the Commerce Department. Economists polled by Reuters had forecast new home sales falling to a 400,000-unit pace.

Most housing stocks rallied sharply, led by Ryland, Beazer and Lennar.

Earlier, weekly mortgage applications fell to its lowest level in nearly two decades, according to the Mortgage Bankers Association, pointing to weakness in buyer demand heading into the usually-busy spring housing season.

Meanwhile, Boston Federal Reserve Bank President Eric Rosengren said the recent drop in the unemployment rate overstates the health of the labour market and should not trigger any speedy reduction in the central bank’s easy monetary policy.

Fed Chair Janet Yellen is scheduled to testify before the Senate Banking Committee tomorrow, in her second testimony before Congress this month.

During her testimony before the House Financial Committee, she underscored the Fed would continue on a course to taper back its $65 billion-a-month bond-buying program, unless there was a notable change in the economy. Traders expect another cut of $10 billion when central bankers meet in March.

European markets finished the day with small losses. The FTSE 100 in London was declining by roughly 0.5%.

Asian markets ended with mixed results — the main indexes in Australia and Japan moved slightly lower while other markets posted gains.

News Sources:  CNBC and CNN Money

THURSDAY: Durable goods orders, jobless claims, natural gas inventories, Kansas City Fed mfg index, 7-year note auction, Fed’s Lockhart speaks

Market Update:

New homes sales welcomed at the beginning of the day, however the low mortgage applications dampened the sentiment.  There are no obvious reasons why the rally cooled around 2pm, but perhaps fear of what Ms Yellen may say tomorrow caused people to take profits off the table.  It has been an impressive rally so far, who knows when it will end.  I still think we will see a new All Time High Close soon though.