Market Wrap: Indexes Set Records on Central Bank Action

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By Ryan Vlastelica

NEW YORK -- U.S. stocks closed higher Friday, with major indexes notching a fifth straight weekly advance after China's central bank cut its benchmark interest rate and its eurozone peer announced asset purchases in efforts to boost each region's economy.

The gains were broad on a day when both the Dow and S&P 500 ended at closing records. All 10 primary S&P 500 industry sectors ended the day higher, while 63 percent of stocks traded on the New York Stock Exchange closed in positive territory. About 50 percent of Nasdaq-listed names were higher on the day.

The People's Bank of China said it was cutting one-year benchmark lending rates for the first time in more than two years.

The move came after European Central Bank head Mario Draghi said "excessively low" inflation had to be raised quickly by whatever means necessary, rekindling expectations the ECB will move to stimulate the euro zone economy. The ECB said it started buying asset-backed securities to encourage banks to lend and revive the economy.

%VIRTUAL-pullquote-It isn't the size of the moves but the shock value of the direction that is really lifting markets today,%"It isn't the size of the moves but the shock value of the direction that is really lifting markets today," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, which manages about $67 billion in assets. "This is a one-two punch for global growth."

The Dow Jones industrial average (^DJI) rose 88.94 points, or 0.5 percent, to 17,807.94, the Standard & Poor's 500 index (^GPSC) gained 10.7 points, or 0.52 percent, to 2,063.45 and the Nasdaq composite (^IXIC) added 11.10 points, or 0.24 percent, to 4,712.97.

Both the Dow and S&P ended at records. For the week, the Dow rose 1 percent, the S&P added 1.2 percent and the Nasdaq rose 0.5 percent. It was the fifth straight weekly advance for all three.

Gains in the Nasdaq were limited by declines in large-cap tech companies. Microsoft (MSFT) fell 1.5 percent to $47.97 while Netflix (NFLX) slid 2.1 percent to $360.28.

GameStop (GME) sank 13 percent to $37.86 a day after the video game retailer posted quarterly revenue and earnings well below expectations. The stock was the biggest decliner on the S&P 500.

The benchmark index's biggest gainers were Ross Stores (ROST) and Autodesk (ADSK), both of which rallied after results late Thursday. Ross jumped 7.3 percent to $89.27 while Autodesk was up 6.1 percent to $61.95.

NYSE advancers outnumbered decliners 2,029 to 1,039, for a 1.95-to-1 ratio on the upside; on the Nasdaq, 1,461 issues rose and 1,286 fell, for a 1.14-to-1 ratio.

The S&P 500 posted 96 new 52-week highs and no new lows; the Nasdaq Composite recorded 111 new highs and 44 new lows.

About 6.5 billion shares traded on all U.S. platforms, according to BATS exchange data, above the month-to-date average of 6.35 billion.

What to Watch Monday:
  • Germany's Ifo institute releases its monthly business confidence index, a key indicator for Europe's biggest economy.
  • At 8:30 a.m. Eastern time, the Federal Reserve Bank of Chicago releases its national survey of economic activity for October.
  • At 10:30 a.m., the Federal Reserve Bank of Dallas releases its survey of manufacturing conditions in Texas for November.
10 Smart Money Moves to Make Before the Year Ends
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Market Wrap: Indexes Set Records on Central Bank Action
Ideally, you've been tracking your spending all year. What were your spending patterns? Did you go over or under in a certain category? Take a look at what you actually spent versus what you had budgeted for. Do you need to change your expectations? Review your financial goals from last year and consider whether they will work for you in the coming year and make the necessary adjustments. If you paid off a loan, see if you can redirect that money into a paying off another debt or adding to a savings or retirement account. Don't let the money get eaten up by miscellaneous expenses. If you don't have a budget, start one now., Level and Check are all good free budgeting tools with features to help you create a budget from scratch, track your spending and set financial goals.
You're entitled to one free yearly credit report from each of the three major credit reporting bureaus: Equifax, Experian and TransUnion. If you space the reports out, you can get one every four months. Get a report now so you know where you stand before heading into the new year. Look over your report and check for errors or negative information. If your credit history could use some improvement, make 2015 the year you get back on track.
That means checking your balances, interest rates, and cash back or other rewards. Call for a rate reduction if you think you might be paying too much in interest. Make a large payment if you are carrying debt and have extra cash in the bank. If you can't pay down a chunk of the debt you accumulated this year, create a debt repayment plan that will get it down next year.
Making just one extra mortgage payment each year can cut your loan down by years, saving you thousands in interest. Also, making an extra mortgage payment means you can claim an extra month of mortgage interest deductions in 2014. If you can't afford an extra payment, make January's payment before the first of the month. If the payment gets credited before Jan. 1, 2015, it will still be tax-break-eligible for 2014. You'll be covered for your January payment and you'll get an additional tax benefit.
If you haven't already, make a contribution to a 401(k), individual retirement account or SEP IRA if you are self-employed. You can contribute up to $5,500 to a traditional or Roth IRA - $6,500 if you're 50 or older. A 401(k) pre-tax contribution must be made through a payroll deduction, so talk to your payroll administer now before it's too late. Some people put off making IRA contributions until April's tax deadline, but you'll be missing out on up to six months of potential investment growth. Don't wait - just do it now.
Look over your health, life, homeowners, renters and car insurance plans. Do you need to adjust your coverage, premiums or add any dependents? Do you need to purchase new coverage, like life or disability? Did you get married, have a baby or buy a house? Do you have any changes coming in 2015 that you need to plan for? Those life events all trigger insurance changes. P.S.: If any of those are yeses, you might need to change your W-2, too.
It's time to finally automate your bills and savings. The more you can automate, the easier your finances will be in 2015. Automating helps you pay your bills on time and maintain a regular savings plan. This is also a good time to cancel any automatic subscriptions you aren't using: video and music streaming, magazines, premium subscriptions, etc.
Recent fluctuations in the stock market might have left you unbalanced. Take a minute to make sure you aren't too heavily weighted toward one asset class. This will help you remain on track to reach your retirement goals by rebalancing to match your target allocations. If you have losses in any taxable account holdings, you might want to consider tax-loss harvesting to offset any gains or ordinary income. You can also consider tax-gain harvesting to reduce longer-term capital gains tax rates. If all this sounds overwhelming, talk to your retirement plan administrator or a certified financial planner for assistance.
If are going to itemize deductions on your 2014 tax return, consider making a charitable contribution to a cause you believe in. The donation must be made to a qualifying organization and the tax benefit only saves you a fraction of what you donate, but you'll be supporting a good cause.
If you have a Flexible Spending Account for health care or other qualifying expenses, now is the time to submit any outstanding claims. You can only carry over $500 from one year to the next, so get those claims in now. This is the perfect excuse to make those doctor appointments you've been putting off all year.
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