Nasdaq Closes Higher But Rally Fizzles
Wall Street took some cautious steps forward Wednesday afternoon, sending the Nasdaq higher and keeping the other indexes near breakeven amid fears that hopes for a housing rebound were overblown.
Major indexes hold modest gains during a light day of holiday-week trading. Technology shares set the pace for a market struggling toward a Santa Claus rally, but banks and homebuilders struggled to come along for the sleigh ride.
The market had opened higher but wallowed into negative territory on a deep disappointment from housing.
New home sales tumbled 11.3 percent in November, raising the specter that previous positive signs in the industry were the result of government stimulus and not sustainable.
The Nasdaq tech gauge outpaced its counterparts as online retailers jumped two days before the Christmas holiday. Volume again was thin but breadth was strongly positive, with losers beating gainers more than 2.5 to 1 on the New York Stock Exchange.
Micron Technology also led the techs higher, as it reported after the bell Tuesday that it had swung to a quarterly profit.
Investors were torn over what to make of the US economy.
The latest readings to boost the recovery theme came from the Commerce Department, which said consumer spending in November showed its second consecutive monthly gain while income rose the most in six months.
A separate reading showed a gain in consumer confidence, though not as much as analysts had expected.
The Reuters/University of Michigan Surveys of Consumers said the final December reading on the index of consumer sentiment was 72.5, the highest since September. It was up from 67.4 in November and 60.1 a year ago.
But the latest figure fell short of analysts' median expectation of 73.5, according to a Reuters poll. It was also below the preliminary December figure of 73.4.
A handful of media companies helped boost the S&P 500 after Wells Fargo upgraded the sector to "market weight" from "underweight." Among the leaders on the broad index were some of the biggest companies in the space, including Gannett and the New York Times Co.
On the Dow 30 bluechip index, leaders were McDonald's , Caterpillar and Alcoa .
The Nasdaq's leaders included online retailers eBay and Amazon.
Homebuilder stocks had been positive prior to the housing news but turned negative, with Beazer leading the losers. However, the SPDR S&P Homebuilders ETF turned positive after seesawing through the session.
In other stock news, Ford Motor shares gained after the US automaker said it is nearing a deal to sell Volvo Cars to China's Zhejiang Geely in the second quarter of 2010, in the latest in a string of deals between Asian and Western carmakers.
Research in Motion saw another Blackberry outage taking place overnight, though service has been largely restored.
Software maker Red Hatbeat Street estimates with its latest results, and is set for a higher move today.