MarketView for November 25

Summary

The Dow Jones Industrial Average chalked up a gain by the closing bell that was just over the line into positive territory on Monday to end at another record high. Meanwhile, the Nasdaq Composite Index added 2.92 points or 0.07 percent, to close 3,994.57. Earlier, the Nasdaq touched an intraday high at 4,007- its first moved above 4,000 in 13 years, but pulled back in late trading.

Volume on the major equity exchanges is expected to remain low this week, ahead of the Thanksgiving holiday on Thursday, which means you can look forward to increased volatility.

Wal-Mart ended the day up 0.8 percent to close at $80.43, off an all-time intraday high of $80.57 after the retail behemoth said it has chosen its next chief executive. The stock was among the Dow's best performers. However, energy stocks slipped following a deal to reduce sanctions on oil producer Iran. And social media shares dropped in volatile trading.

The agreement between world powers and Iran to partially curb Iran's nuclear program was seen as bolstering positive sentiment, even though it may not increase Iran's oil exports. U.S. crude fell 75 cents, or about 0.79 percent, to settle at $94.09 a barrel. Despite the pressure on the energy sector, the deal with Iran was viewed as having positive benefits for the market at large.

Notable social media stocks fell, with Facebook breaking through a technical support level at $45.80. Facebook was down 3.1 percent to close at $44.82. Yelp shares fell 6.7 percent to $58.20. Twitter lost 4.7 percent to end the day at $39.06.

Healthcare and financial stocks were the day's winners. In contrast, Boeing fell 2.2 percent to end the day at $133 after the company advised airlines on Friday about the risk of engine icing problems on its new 747-8 and 787 Dreamliner planes. Shares of General Electric, which makes the engines, fell 1.3 percent to close at $26.73.

The consensus on the Street is that stock market could still go higher, despite the S&P 500 being up 26.4 percent for the year and the Dow being up seven weeks in a row.

Pending Home Sales at 10-Month Low

Contracts to buy previously owned homes hit a 10-month low in October. The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, slipped 0.6 percent to 102.1, the lowest level since December.

It was the fifth straight month of declines in contracts and suggested home re-sales could remain on the back foot for the rest of this year. These contracts become sales after a month or two. Home re-sales fell in October for a second straight month.

Contracts fell 4.6 percent in September. They were down 1.6 percent compared to October last year.

The Street was looking for pending home sales to rise 1.3 percent in October from September. As a result, the weak home sales trajectory could see the Fed sticking to its $85 billion monthly bond buying program until early next year. The Fed has targeted housing as a channel to boost growth and speed up job creation. It noted at last month's meeting that the housing sector recovery had slowed somewhat in recent months.

The Realtors group said October's 16-day partial shutdown of the federal government had sidelined potential buyers. According to the NAR, a survey of realtors found 17 percent of respondents reported delays in signing contracts because they had to wait for the Internal Revenue Service to verify income before the mortgage could be approved.

Pending home sales were up in the Northeast and Midwest. They dropped 4.1 percent in the West. The Realtors group expected a bounce back in contracts, but it cautioned that lack of inventory remained a constraint.

Home sales have also been dampened by a rise in mortgage rates. Interest rates have risen sharply since May as markets anticipated the Fed would start cutting back on its monthly bond purchases this year, with the 30-year fixed mortgage rate surging nearly a full percentage point. It hit 4.49 percent in September, the highest since July 2011, according to Freddie Mac. However, rates have been retreating as expectations of a Fed taper are pushed to early next year.

Though housing is cooling, the economy appears to have retained some of the upward momentum from the third quarter.