DJIA 12,217 S&P500 1,257 Nasdaq 2,605 Gold 1,567 Oil 99

The Dow Jones Industrial Average (NYSEARCA:DIA), Nasdaq (NASDAQ:QQQ), and S&P 500 (NYSEARCA:SPY) ended the week down a couple points — closing the year essentially flat. On the commodities front, Oil (NYSEARCA:USO) lost a couple pennies, and Gold (NYSEARCA:GLD) continued to struggle.

Trending Now: The Dogs of the Dow Retrieve Returns for Owners.

Now, for our analysis of the 15 reasons markets moved this week:

Tuesday

Tuesday’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 during the recession that ended 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.

3)      Sears. Sears Holdings (NASDAQ:SHLD) 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 (NYSE:JCP), Kohl’s (NYSE:KSS), Saks (NYSE:SKS), The Bon-Ton Stores (NASDAQ:BONT), and Wal-Mart (NYSE:WMT) all closed the day lower.

BONUS: U.S. Treasuries Surged on Safe-Haven Demand to Best Performance Since 1995.

Wednesday

Wednesday’s markets were down because:

1)      Holidays. Trading will be light throughout the holiday week, and so far little is going on in the U.S. market, leaving investors with few economic or corporate cues. However, low trading volumes can lead to more pronounced swings that today pulled the three major indices down more than 1 percent. With little news to rock markets today, investors are instead looking at the bigger picture — the U.S. economy has shown signs of major improvement in terms of consumer spending and unemployment, but the debt crisis in Europe continues to threaten the global economic outlook, and could reverse progress made in the last quarter.

2)      Euro. European equities advanced earlier in today’s session after an Italian debt auction where short-term borrowing costs were halved, which could be a good sign for a sale of longer-dated bonds on Thursday. However, those gains were short-lived, as the euro fell to $1.2938, its lowest since January. With little else for investors to latch on to, the declining euro sparked a sell-off in early morning trading that continued throughout the day.

3)      Oil. Iran has threatened to cut off access to the Strait of Hormuz, a vital artery through which one-fifth of the world’s oil supply is transported, if the U.S. follows through on planned economic sanctions meant to thwart Iran’s nuclear ambitions. The sanctions would substantially reduce Iran’s oil revenue by penalizing foreign corporations doing business with Iran’s central bank, which collects payment for most of the country’s energy exports. Oil exports finance as much as half of Iran’s budget. Iran’s response — to threaten blocking access to the strait — may have been calculated to cause a spike in oil prices, which rose above $100 a barrel shortly after the threat was issued, as a warning to American trading partners against joining the new sanctions, but that does not mean that it won’t follow through on its threat should the U.S. continue to threaten the nation’s livelihood.

BONUS: Obama to Ask Congress for $1.2 Trillion Increase in Debt Limit.

Thursday

Thursday’s markets were up because:

1)      Housing. The number of Americans signing contracts to buy homes rose in November to an 18-month high, offering yet another sign of a tentative recovery in the housing market. The National Association of Realtors’ Pending Home Sales Index, which is based on contracts signed in November, increased 7.3 percent to 100.1 — the highest level since April 2010. A reading of 100 is considered healthy. The report boosted shares of homebuilders, including Pulte (NYSE:PHM), DR Horton (NYSE:DHI), Masco (NYSE:MAS), Lennar (NYSE:LEN), and NVR Inc. (NYSE:NVR).

2)      Employment. New jobless claims rose more than expected last week, but the underlying trend may still point to an improving labor market. The U.S. Labor Department’s weekly report on initial unemployment benefits applications showed claims to have risen by 15,000 to a seasonally adjusted 381,000 in the week ended December 24. However, the four-week moving average, considered to be a better measure of overall trends, fell 5,750 to 375,000, its lowest level since June 2008. Furthermore, the weekly initial claims figure remains below the 400,000 mark that is normally associated with an improvement in labor market conditions.

3)      Italy. The European sovereign debt crisis has remained a focal point in the eyes of investors throughout the year, and market trends have been strongly linked to progress, or lack thereof, made toward effecting a solution to the debt crisis. So when Italy, the euro zone’s third-biggest economy, saw yields on long-term bonds decline today, one day after yields on short-term bonds were halved, it gave investors hope that Italy will survive the crisis. However, the Italian bond market was buoyed by the European Central Bank’s new three-year liquidity measures. The ECB last week loaned European banks 489 billion euros in a bid to keep credit flowing to the euro economy, of which Italian lenders borrowed 116 billion euros. After today’s auction, the yield on the benchmark 10-year note climbed 12 basis points to 7.12 percent.

BONUS: Payroll Tax Cut Diverts Funds from Fannie and Freddie.

Friday

Friday’s markets were down because:

1)      Friday. It’s the last day of trading in 2011, news is scarce, and people are ready to say goodbye to a year rife with economic and political turmoil. Stocks had a lackluster year, and are ending in that same vein after a relatively quiet day of trading. Though low volume, typical of the holiday week, has led to more pronounced swings this week, it seems most investors have already taken off for the weekend.

2)      Financial. Throughout the year, financial stocks have continued to be some of the biggest movers, and are largely responsible for huge fluctuations on the S&P 500, of which they account for 14 percent. This week the S&P 500 clawed its way back in the green for 2011, but owing no thanks to Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), or Morgan Stanley (NYSE:MS) all of which declined more than 40 percent this year.

3)      Treasuries. While stocks may have had a lackluster year, Treasuries (NYSE:TLT) managed to log the biggest gains since 2008. Though recent reports have signaled that the U.S. economy is recovering, Treasuries are poised to beat equities, commodities, and the dollar for the year as Europe’s sovereign debt crisis continues to drive demand for safe-haven investments.

BONUS: How Did Gold and Silver Perform in 2011?

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