December Stock Market Report and Economic Update

stock market reportBy Greg Naylor
December was an uneventful month, as markets anxiously awaited resolution of the ‘fiscal cliff.’  The last week of December saw markets end the year on an up note, with the S&P 500 posting a year of double-digit gains despite many headwinds. Looking ahead into 2013, attention has already turned to the next political crisis – legislation around the debt ceiling and sequestration. Here is a re-cap of December for the stock market and economic indicators, by the numbers.

Stocks & Bonds

After a positive November, U.S. stocks continued their upward climb. Interestingly, foreign stocks continue to post relatively strong gains, as dollar strength over the last year has just recently shifted to dollar weakness. Inflation for the year came in below 2%, unsurprising in a recessionary environment.

S&P 500 Total Return MSCI EAFE BarclaysAggregateBond Unadjusted CPI
December 0.91% 3.11% -0.14% -.47%
November 0.58% 2.20% 0.16% -.04%
YTD 2012 16.00% 12.78% 4.22% 1.76%

Commodities & Currencies

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NYMEX crude gained 3.3% in December to close at $91.82 per barrel. For the year, the price of NYMEX crude dropped about 7%, its worst year since 2008.  After a strong start to the year, commodities continued their mixed performance in December. For the year soybeans and wheat were up 18% and 19% respectively. Natural gas rose 13% for the year.  Coffee and orange juice were down 37% and 31% for the year. Palladium and platinum rose 7% and 10% for the year.

The dollar index in December fell 0.47%. It ended the year nearly flat, after gaining in the first half of the year and then sliding the second half.


Economic indicators continued to offer mixed signs of recovery and recession. After a few good months, The Institute for Supply Management reported that the manufacturing PMI in December was up 1.2% from 49.5 in November, to close the month at 50.7. A reading above 50 indicates economic expansion.

The National Association of Realtors (NAR) reported that the annual rate of existing-home sales in November increased 5.9%. National median prices also rose 10.1%.  The Fed policy of low interest rates has certainly played a part in the housing recovery, as mortgage rates are near historic lows.


2012 was a year that delivered real good news, often obscured by negativity in the media. The stock market posted largely double-digit gains, and bonds also posted gains. Fed policy of low interest rates has spurred a surprising rebound in the housing market, and the unemployment rate fell from 8.5% in December 2011 to 7.8% at the end of December 2012. In addition, inflation remains tame and below the official Fed guideline of 2%.

This material was prepared by Greg Naylor, and does not necessarily represent the views of Woodbury Financial or its affiliates. This information should not be construed as investment, tax or legal advice and may not be relied upon for the purpose of avoiding any Federal tax liability. This is not a solicitation or recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. The S&P500, MSCI EAFE and Barclays Aggregate Bond Index are indexes. It is not possible to invest directly in an index. 

Investing involves risks and investors may incur a profit or a loss. Past performance is not an indication of future results.

Data Sources: – S&P 500 information – MSCI EAFE information – Barclays Aggregate Bond information – NYMEX crude prices – U.S. Dollar & commodities performance – Housing market data – GDP numbers – CPI and unemployment numbers – Consumer spending data – PMI numbers

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About Greg Naylor: Greg is a partner and co-founder of Fiat Wealth Management, an independent financial advisory firm in Long Lake, Minnesota. He has been investing for over 7 years and enjoys sports, reading, singing, and spending time with family. Greg is a 2004 graduate of the University of Minnesota and lives in South Minneapolis with his wife Kat. Click here for more articles by Greg.

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