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From Briefing.com: 09:08 am Weekly Wrap
The market looked set to end a quiet, holiday-shortened week flat, but an aggressive end-of-day sell-off Thursday left the major U.S. averages in the red.

It was a very slow week. With a number of foreign markets closed on Monday and Thursday, the calendar thin on catalysts and many traders off their desks, volume was well below average. In fact, Tuesday and Thursday were the two lightest volume days of the year at the NYSE; even less than the day after Thanksgiving when the market only traded for a half day.

But it's because of the light volume that Thursday's late-session move was possible. It wasn't news-related. Instead it was most likely funds squaring up positions before the year-end, with the decline exaggerated by the light volume.

There could be some element of nervousness ahead of the New Year's celebrations, given the attempted terrorist attack on Christmas Day. But once again it's most likely longs exiting some of their positions while the 2009 tax year is still in effect.

A trend we've been watching recently is the weakness in the Treasury market. The yield on the 10-year Note increased approximately 65 bps this month to 3.85%. The strength in stocks that has been seen alongside rising Treasury yields can be explained easily as an asset reallocation trade that is predicated on lower levels of risk aversion.

But the yield on the 10-year Note only increased modestly this week. It had spiked to a multi-month high of 3.910% Thursday morning following better-than-expected Claims data -- Initial 432,000 vs. the 460,000 consensus; Continuing 4.981 million vs. the 5.100 million consensus -- but gave up those gains before closing early for the holiday.

Yields were held in check this week due to three Treasury Note auctions -- $44 billion in 2-years Monday; $42 billion in 5-years on Tuesday; $32 billion in 7-years on Wednesday. Considering the number of participants that were absent from the market this week, the results from a demand perspective were not bad.

Looking ahead to next week, the economic calendar will be in focus, particularly the employment sector as the change in Nonfarm Payrolls and the Unemployment Rate for December will be released on Friday.

 
 Index      Started Week Ended Week Change % Change   YTD  
 DJIA 	      10520.1 	10428.05   -92.05   -0.9 %  18.8 % 
 Nasdaq 	      2285.69 	 2269.15   -16.54   -0.7 %  43.9 % 
 S&P 500       1126.48     1115.1   -11.38   -1.0 %  23.5 % 
 Russell 2000   634.07 	  625.39    -8.68   -1.4 %  25.2 %

4:25 pm : Light news flow and a poor turnout left stocks to trade in lackluster fashion for most of the session, but some late pressure caused stocks to close at session lows and conclude the year on a weak note. Still, stocks settled only slightly below their 52-week highs with strong gains for the year.

As has been the case all week, participants had few cues for trade this session. Of the few headlines there were, little reaction was made.

The latest dose of data featured initial jobless claims for the week ending December 26. Initial claims fell 22,000 to 432,000, which is less than the 460,000 initial claims that had been expected. It also marked the lowest tally in more than 15 months. However, the dip did come during the week of Christmas.

Meanwhile, continuing claims came in at 4.98 million. That was lower than expected and below 5.00 million for the first time since February.

Participants shrugged off the better-than-expected jobless claims numbers, but gave focus to the dollar, which had offered early support for stocks with a 0.6% overnight loss against competing currencies, but later weighed on stocks as it recovered to finish with a 0.1% gain. The Dollar Index closed the month with a 4.1% gain, but finished the year with a 4.1% loss.

The dollar's doldrums this year helped prop up commodities prices and gave the CRB Commodity Index a 23.5% annual gain. The CRB closed this session with a 0.1% loss, though.

Still, the reflation trade that followed the global economic slowdown earlier this year helped make materials stocks some of this year's best performers -- the materials sector booked a gain of 45.2% this year, although it shed 1.3% this session.

Of the major sectors, tech was the best performer in 2009. Though it quietly shed 1.1% in its latest outing, it still finished the year with a 59.9% gain. Large-cap tech issues helped the Nasdaq Composite advance 43.9% this year to outperform its counterparts with relative ease; the S&P 500 finished the year with a 23.5% gain, while the Dow finished 2009 18.8% higher.

Financials showed strength for most of this session, but buckled when the broader market took a dive in the final hour of trade. They fell 0.4% this session, but were up 14.8% for the year. Though its yearly gain wasn't as impressive as what was accomplished by other sectors, financials finished the year up approximately 250% from their March low.

That spike is attributable to bank stocks, which rallied after liquidity fears faded. Many widely-held bank stocks had fallen below $1 per share during the depths that the stock market saw, but they have since climbed exponentially.

With many market participants looking to lock in such gains, trading volume has been light for the past couple of weeks. End of year holidays have also led to light volume as many trading desks have become lightly staffed.

Since the stock market is closed tomorrow, January 1, to observe New Year's Day, such was also the case this session. Fewer than 700 million shares traded hands on the NYSE this session. That's less than half of this year's average single-session trading volume, which stands close to 1.4 billion shares.

Advancing Sectors: (None)
Declining Sectors: Utilities (-1.5%), Industrials (-1.3%), Materials (-1.3%), Health Care (-1.2%), Consumer Staples (-1.1%), Tech (-1.1%), Telecom (-1.0%), Consumer Discretionary (-1.0%), Energy (-0.9%), Financials (-0.4%)DJ30 -120.46 NASDAQ -22.13 NQ100 -1.0% R2K -1.3% SP400 -1.3% SP500 -11.32 NASDAQ Adv/Vol/Dec 1026/1.25 bln/1730 NYSE Adv/Vol/Dec 994/680 mln/2018