Market Recap: Stocks Trapped Between Declining Home Prices and 'Improving Consumer Sentiment

Markets closed mixed on Wall Street today:

• Dow -0.02 percent
• S&P +0.01 percent
• Nasdaq +0.25 percent
• Oil +1.67 percent
• Gold -0.69 percent

On the commodities front:

• Oil (NYSE:USO) climbed to $101.34 a barrel
• Gold (NYSE:GLD) fell to $1,594.90 an ounce
• Silver (NYSE:SLV) fell 1.54 percent to settle at $28.64

(Related: Wealth Disparity Grows Between Lawmakers and their Constituents)

Today’s markets were mixed because:

1) Home Prices: Though equities closed the day mostly flat, they started the day sharply lower on news that U.S. home prices fell more than forecast in the year ended in October, indicating that the housing market continues to be weighed down by foreclosures. The S&P/Case-Shiller index of property values in 20 major U.S. cities fell 3.4 percent from October 2010 to October 2011, after decreasing 3.5 percent in the 12-months ended in September, the group said today.

2) Consumer Confidence: Stocks quickly reversed their decline when the Conference Board announced its index of consumer sentiment rose to the highest level in eight months in December, with a reading well above the average in June 2009. Improving sentiment might help sustain household purchases, which account for roughly 70 percent of the U.S. economy.

The Conference Board’s measure of present conditions increased this month as well, as did its measure of expectations for the next six months, while the share of consumers saying they believed “jobs were plentiful” rose in December to its highest since January 2009 and those saying “employment was hard to get” decreased to the lowest since January 2009.

More respondents also said they “expected more jobs to become available in the next six months,” and that they expect their incomes will likely increase as well.

Why they should expect that is anyone’s guess.

3) Sears: Sears Holdings on Tuesday reported a sharp drop in holiday sales compared to a year ago, and said the results will force them to close 100 to 120 Sears and Kmart stores. As a result, SHLD shares plunged 26 percent, dragging down other retail stocks on fear that Sears might not be alone when it comes to underwhelming holiday sales figures. J.C. Penney, Kohl’s, Saks, The Bon-Ton Stores, and Walmart all closed the day lower.

[Editor’s note: the above is a cross post that originally appeared on Wall St. Cheat Sheet.]