What a Week: Mood Swings

Traders spent the week grappling with undeniably strong economic growth and the trouncing of rate-cut hopes.

With most of December's data in the hopper, the fourth quarter of 2006 has shaped up to be more of a barnburner than expected. Economists believe fourth-quarter GDP will reflect 3.3% growth, as the labor market remains robust, the housing market is working off its overbuilt inventory and the consumer is still spending.

In particular, new-home sales data this week showed that homebuilders are working down their inventories. Friday's durable goods orders reflect increasing capital spending outlays. ...