Stocks resumed their ascent Friday, after a dip on Thursday, as investors were encouraged about the prospects for recovery after a series of analyst upgrades.
The Dow Jones Industrial Average gained about 36 points, or 0.4 percent. The S&P 500 and Nasdaq each gained about 0.3 percent. Volume was heavy on this quadruple witching day, with nearly 2.3 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 3 to 2.
Quadruple witching is the expiration of four contracts—stock index futures, stock index options, stock options and single stock futures—and it happens once a quarter, bringing both bullishness and volatility to the market.
Procter & Gamble shares led the Dow today, up 3.2 percent, after Citigroup raised its rating on the stock to "buy," saying the company is about to get aggressive with pricing to win back market share.
There were a slew of other upgrades today:
Apple shares rose after an upgrade to "outperform" from Macquarie, which said it is "increasingly confident that Apple has negotiated the worst of the consumer recession" and that the iPhone would continue to dominate the smartphone market next year.
And Dow oil component Chevron got an upgrade to "outperform" from Credit Suisse, which said Chevron is among the likeliest in the sector to deliver growth in the next decade.
Homebuilders Toll Brothers and KB Home advanced after being upgraded by JPMorgan, which said the housing sector will continue to recover in the next two years.
Chip stocks got a boost after SanDisk was upgraded by Bank of America-Merrill Lynch to "buy."
Among the few downgrades today was Genzyme : Deutsche bank downgraded the stock to "hold" from "buy."
And Palm shares fell 3 percent after the hand-held device maker beat analyst estimates but disappointed with its outlook.
For the week, major indexes gained between 2.2 and 2.5 percent. The S&P and Nasdaq are each on pace for their seventh consecutive monthly gains.
Banks finished mixed, with Bank of America up slightly and Citigroup down 3.6 percent.
Small-cap Arena Pharmaceuticals rallied 5.5 percent after the experimental obesity drug fell short of one FDA guideline but met another and analysts said data indicated the drug was safe.
For the week, all 10 key S&P sectors advanced, led by materials, financials and industrials.
Caterpillar had the most positive effect on the Dow, up more than 10%.
What was the big buzz in the market this week? Click on the video at left to watch "The Week and You" with Mike Huckman.
Year-to-date, American Express continues to be the Dow's powerhouse, up more than percent.
General Electric had the most positive impact on the S&P for a second week in a row, up more than 12 percent this week. The stock ended the week around $16.50, after rallying to $17 earlier in the week.
Apple was the leader on the Nasdaq 100, up more than 7 percent.
Investors were encouraged by this week's economic data, particularly a couple of reports on manufacturing, and comments from Fed Chairman Ben Bernanke that the “recession is probably over.”
The dollar was weak for much of the week, which helped propel gold to a fresh 18-month high above $1,025 earlier this week, before pulling back to end the week at $1,10.30 an ounce as the dollar gained some strength on Friday.
Among the week's big news: the government may start to unload some of its 34-percent stake in Citigroup; economic bellwether FedEx hit its earnings target and said shipping volumes are improving outside the U.S. but tempered its outlook and said it will raise rates by about 6 percent; and, And Eli Lilly announced plans to cut $1 billion in costs and 5,500 jobs as it braces for generic competition for some of its drugs.
In addition to volume picking up, volatility also subsided, with the CBOE volatility index ending the week at 23.92. Year-to-date, volatility is down 40 percent.
Well-known banking analyst Meredith Whitney said on CNBC this week that the economy remains weak and will face a big test next month when the government starts to wind down its support programs.
On Tap for Next Week:
MONDAY: Obama speech on economy; leading indicators; Earnings from Lennar
TUESDAY: Two-year auction; two-day Fed meeting begins
WEDNESDAY: Weekly mortgage applications; weekly crude inventories
THURSDAY: G-20 summit begins; weekly jobless claims; existing-home sales; seven-year auction; Earnings from RIM
FRIDAY: Durable-goods orders; consumer sentiment; new-home sales; Earnings from KB Home
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