Stocks Finish Up as Holiday Rally Continues
Wall Street continued its push for a happy holiday, with stocks closing higher Tuesday as investors focused on positive housing news and the prospects of a mild Santa Claus rally.
That at least was the reaction from what few investors remained in the market as a wild 2009 nears what likely will be a quiet close.
Trading in a narrow range on very light volume, stocks were powered higher by home builders and energy companies.
The former group took its cure from a National Realtors Association report that said home sales rose 7.4 percent in November—much better than expected—though the gains came mostly from the low end of the market and one in three sales was off a foreclosure.
The latter group gained as oil prices climbed over $74 a barrel amid talk from OPEC that it wanted prices to stay in the $70-$80 range.
"It feels like were going to keep trickling up until the end of the year," said Dave Lutz, managing director for trading at Stifel Nicolaus in Baltimore. "This is a typical seasonality trade where you have anybody that has been chasing performance needs to lock down into some holdings. Also, people are starting to get more positive about the outlook for next year."
The dollar was mixedas light trading also swept across the currency markets. The Chicago Board Options Exchange's Volatility Index for the first time in more than a year slipped below 20, a number generally considered the yardstick for high fluctuation. The VIX is considered the market's most reliable measure of investor fear.
Analysts said the fall in the VIX reflected the likelihood that the rest of 2009 will be the quiet preceding a more active January.
"In the New Year considerations of the Fed's next course of action as to rates and stimuli in relation to growth, Q4 earnings season and guidance as well as the next course of the dollar and gold and oil should all mix to spike the punch bowl and spark some life back into the VIX," wrote John Stoltzfus, analyst at Ticonderoga Securities in New York.
"For now, it looks like gentle slumbers will the air into the holiday without some unforeseen bolt from the blue appearing on the horizon."
For Tuesday's session, positive feelings prevailed.
The S&P 500 hit its 2009 high early in the session, a day after the Nasdaq accomplished the same feat.
The steeper yield curve and the potential of higher interest rates both indicated a stronger economy and kept gains in check amid the GDP uncertainty.
The biggest gainers on the Dow included DuPont and Boeing. Boeing is planning to conduct a second test flight of its 787 Dreamliner in Washington, scheduled for 11:45 am New York time in Everett, Wash.
CNBC.com-parent General Electric was the biggest drag on the bluechips heading into the final hour of trading.
Home builder stocks were up on the housing data, with Pulte Homes leading the group. The SPDR Homebuilders ETF was up more than 2 percent in afternoon trading.
Ford shares gained after the company said it was offering buyouts and early retirement options to all 41,000 of its US factory workers. UBS also increased its price target for Ford from $9 to $12.
Among unusual percentage gainers, Danish mobile hydraulics firm Sauer Danfoss saw its shares jump on an announcement that industrial components company Danfoss would acquire the remaining shares it does not already own for $10.10 a share in a deal worth more than $118 million.
Ireland's banks were being traded actively after the government said the two institutions in which it has interest, Allied Irish Banks and Bank of Ireland, will be strong enough to sell their government stakes in a year or two but will need to raise capital.
Jabil Circuit shares rose as it posted better-than-expected earnings for its first quarter.
Yahoowill be shutting down its offices from Dec. 25 to Jan. 1 in a cost-cutting move. Yahoo told CNBC it informed employees of the company's first mandatory shutdown this past summer.