A miserable year for the market ended on a high note. In the final week of 2008 and the first trading day of 2009, the Dow gained nearly 6% and ended up above 9,000 for the first time in nearly two months. The S&P 500 was up over 7%. The market fell back slightly yesterday as some investors took profits, only to come back in stride today.
 

Yesterday, President-elect Obama met with Congressional leaders and reiterated the need for fast stimulus action. He’s favoring a two-year stimulus plan in the neighborhood of about $800 billion. In addition to extra federal spending, the plan includes tax cuts worth $300 billion for households and about $100 billion for businesses. Some specific provisions in the plan, such as a one year tax credit for companies who hire new employees, are still being negotiated. However, the plan even the way it looks today is certainly a confidence booster.
 

The Pending Home Sales Index, which tracks the number of home sales contracts signed, declined 4% in November. However, mortgage applications surged dramatically in December thanks to record low mortgage rates resulting from the Fed emergency actions. We are curious to see what December’s data will be, but we expect at least a modest improvement in the housing market in 2009.