Dec 30 - Summary: Blue chips closed at a lifetime high for the seventh time in eight sessions in pre-holiday trading; Pending home sales rebound but not strong enough; Wells Fargo to pay Fannie Mae for loans leading up to mortgage meltdown; U.S. picks sites to explore drone use. Conway G. Gittens reports.
Blue chips nudged up to another record close, but trading was light with many traders out of the office for the holidays. Weaker-than-expected housing data seemed to hold back the rest of the market, with investors marking time after the best two-week build up in five months. Looking back, Alec Young of S&P Capital IQ, says there are real reasons behind that gain. SOUNDBITE: ALEC YOUNG, GLOBAL EQUITY STRATEGIST, S&P CAPITAL IQ (ENGLISH) SAYING: "One has been the extremely accommodating policy of the Federal Reserve. In addition, we're seeing increasing signs that the U.S. recovery is improving, so that's bullish for the corporate earnings outlook. In addition, it signals that the Fed's tapering of their QE program, starting in January, is something that the economy can handle." But Monday's housing data was a disappointment. Even though contracts to buy previously owned homes rose in November, the first gain in six months according to the National Association of Realtors, the number was below expectations. The latest sign rising mortgage rates are slowing down the housing recovery. Wells Fargo is looking to close the books on its role in the housing crisis. The No. 4 U.S. bank agreed to pay $591 million to Fannie Mae. The money is to settle liabilities related to loans it sold to the government-controlled home financing provider before January 2009. In other company news... Twitter continued its dive, falling 5 percent, as investors take some money off the table before the end of the year - after the stock nearly tripled from its IPO price last week. Shares of Crocs shot up 21 percent. After private equity firm Blackstone Group shelled out $200 million for a stake in the shoemaker and the head of the company prepares to step down next year. Authorization has been given for drone testing at six sites - a step towards possibly opening the skies for things like small package delivery by Amazon. Aerospace companies such as Boeing, Northrop Grumman, Lockheed Martin, and AeroVironment could benefit if the use of unmanned aircraft expand to more commercials uses. Finally, European indexes stayed on track to post their biggest annual gain in four years after signs of economic recovery and a long run of cheap central bank money encouraged investors to scoop up shares.