There was a strong start to the New Year with the broader markets up approximately 1% on the first day of trading.  Overall, drivers of the market sentiment continued to be positive indicators surrounding the US recovery.  The financials received a late holiday gift with the BAC repurchase settlement with Fannie and Freddie early in the week.  The S&P 500 rose 1.1%, NASDAQ jumped 1.9% and the SNL Bank and Thrift Index outpaced, advancing by 2.2% for the week.

On Tuesday, the broader markets were mixed, and overall, finished off their worst levels of the day.  Activity continues to pick up, with volumes higher, although trends still aren’t back to non-holiday levels. Economic data continued to signal that the economy picked up steam at the end of 2010 …

The S&P 500 advanced 12.78%, the NASDAQ rose 16.91% and the Russell 2000 jumped 25.31% for the year ending 2010. Netflix was the best of the S&P 500, soaring about 219%, while Baidu was the top of the NASDAQ up 134%.  December proved to be a fruitful month helping these indices add 6.5%, 6.2% and 7.8%, respectively.  The fourth quarter of 2010 produced impressive returns of 10.2%, 12.0% and 15.9%, respectively. 

The last week of the year began with traders shrugging off China’s surprise rate hike.  This second rate hike is approximately two months indicates China’s efforts to control price expansion at the expense of the country’s growth.  Plus the snow drenched northeast made commutes extremely difficult.  European shares fell on thin volume and the UK markets were closed as investors booked December gains following China’s rate increase….