Strong gains in consumer spending and technology stocks fueled a long-awaited Santa Claus rally on Wall Street.
Major indexes each gained more than 1 percent, with tech stocks again leading the way after a strong performance Thursday. Trading on the New York Stock Exchange hit a record volume for the opening half-hour of the market, officials there said, and the Dow hit its high for the day right at the close.
Investors shrugged off news that the Federal Reserve's favorite inflation indicatorreflected the dueling concerns of rising prices and slowing economic growth. Instead, they focused on numbers showing a sharp increase in consumer spending.
Earnings results for tech leaders Research in Motion also helped spur the powerful rally.
"The market's taken some bad news over the last week or so pretty well and we're starting to see a glimmer of good news," said Steve Sachs, director of trading at Rockville, Md.-based Rydex Investments. "Given the lack of activity next week we probably will see this bid in the market continue as go towards the new year."
Even the battered financial sector got in on the holiday joy, with shares showing wide though modest gains.
Shares of Merrill Lynch were higher on news that Singapore state investor Temasek Holdings might inject $5 billion into the subprime-shaken bank. And First Marblehead , which securitizes student loans, surged after it said it would get up to $260.5 million in funding from a Goldman Sachs unit.
Also, the Fed released results of its second liquidity auction, which resulted in another $20 billion dollars in funds sold to commercial banks at an interest rate of 4.67 percent. The central bank plans to hold two additional auctions in January.
Tech Continues Rally
Research in Motion led the tech surge. The Blackberry maker said quarterly profit more than doubledfrom the year ago, topping expectations.
Meanwhile, medical products company Respironics is set to get snapped up by Philips Electronics for $5.2 billion, in what would be the Dutch company's biggest acquisition. Respironics shares soared on the news.
Friday Earnings featured dismal news from electronics retailer Circuit City, which reported a wider third-quarter loss Fridayas sales fell and store changes disrupted business. Shares dropped sharply.
Also in earnings, drug store chain Walgreen posted higher quarterly profit, helped by higher sales and cost controls. Walgreen reported a profitof 46 cents a share, beating estimates by 2 cents.
In other corporate news, Marsh & McLennan , one of the world's largest insurance brokers, said on Friday it was searching for a new chief executive. Chairman and CEO Michael Cherkasky will step down once a successor is found, the company said.
On the Dow, Merck was the only component moving to the downside, while General Electric and Verizon were among the blue-chip leaders.