US MarketsData Could Decide Market Course Even as Profit Taking Threatens

RallyThe major U.S. index futures are pointing to a modestly higher opening on Wednesday. Stocks have been moving up nicely in the past two sessions and this introduces an element of risk associated with overbought levels.
That said, the movement in today's session largely hinges on the housing and consumer sentiment data to be released shortly after the markets open.

Earlier, a Commerce Department report showed that personal income rose at its fastest rate since May, when it rose 1.5%. That said, the increase trailed expectations. At the same time, holiday sales spurred consumer spending, which rose at a decent 0.5% clip.

Technology earnings released after the markets closed yesterday continue to vouch for the strong recovery in the sector.U.S. stocks opened Tuesday's session higher and rose further in early trading, aided by positive housing data. Thereafter, the major averages moved sideways to close moderately higher.

The Dow Industrials ended up 50.79 points or 0.49% at 10,465, the Nasdaq Composite Index rose 15.01 points or 0.67% to 2,253 and the S&P 500 Index closed at 1,118, up 3.97 or 0.36%.

Twenty-two of the thirty Dow components closed higher, with Boeing (BA), DuPont (DD), Home Depot (HD), Kraft Foods (KFT), IBM (IBM) and American Express (AXP) among the top gainers in the session.

Among the sector indexes, the NYSE Arca Airline Index rallied 4.6% compared to a 1.73% advance by the NYSE Arca Biotechnology Index. The NYSE Arca Securities Broker/Dealer Index rose 1.17%, while the Philadelphia Housing Sector Index advanced 2.8%.

On the economic front, the National Association of Realtors reported that existing home sales rose to a seasonally adjusted annual rate of 6.54 million units in November, with the upside coming from an increase in sales of single-family homes.

Existing home sales reached their highest level in about 3 years. Economists had expected sales of 6.25 million units. Inventories measured on the basis of months of supply declined to 6.5 months from 7 in the previous month. The median sales price of an existing home declined 4.3% year-over-year.

Meanwhile, the third estimate of third quarter GDP showed 2.2% growth, revised down from the previous estimate of 2.8%.

The downward revision reflected a bigger-than-expected draw down in inventories, smaller than expected spending on national defense, lesser-than-expected state and local government spending.

Spending on equipment and software was also downwardly revised.
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