Traders woke up this morning to a surprisingly robust report on fourth-quarter gross domestic product (GDP), with the Commerce Department noting a 5.7% expansion in the U.S. economy. This marked the fastest rate of growth since the end of 2003, and the Dow Jones Industrial Average (DJIA) rallied to an early triple-digit gain. However, a closer look suggested that the upbeat report was mostly the result of businesses restocking inventories, rather than a meaningful rebound in consumer spending, and early optimism soon faded. Investors also considered the Senate's unenthusiastic reappointment of Federal Reserve Chairman Ben Bernanke, with the beleaguered Fed head receiving more "no" votes than any other chairman in history.
The Dow Jones Industrial Average (DJIA – 10,067.33) finished on a loss of 53.1 points, or 0.5%, breaching support at its 20-week moving average for the first time since April 2009. The Dow shed 1% this week, and ended January with a loss of 3.5%.
The S&P 500 Index (SPX – 1,073.87) backpedaled 10.7 points, or roughly 1%, and joined the Dow in violating its 20-week trendline for the first time since April 2009. The SPX gave up 1.6% this week, and tumbled 3.7% for the month.
Finally, the Nasdaq Composite (COMP – 2,147.35) plunged 31.7 points, or 1.5%, to finish beneath its own 20-week moving average. The COMP wrapped up the week on a deficit of 2.6%, and settled the month of January on a steep loss of 5.4%.
Levels to Watch in Trading:
Dow Jones Industrial Average (DJIA – 10,067.33) - support at 9,000; resistance at 11,000
S&P 500 Index (SPX – 1,073.87) - support at 950; resistance at 1,300
Nasdaq Composite (COMP – 2,147.35) - support at 1,900; resistance at 2,600
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