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Stocks Rise for 6th Day; VIX Near 20

Stocks eked out a gain Monday, their sixth straight win, after a report showed the holiday-shopping season wasn't as bad as predicted.

Major indexes struggled with volume light, given the holiday-shortened week. The Dow Jones Industrial Averagerose 26.98, or 0.3 percent, to close at 10,547.08. The S&P 500added 0.1 percent and the Nasdaq gained 0.2 percent. Just 705 million shares changed hands on the New York Stock Exchange.

TheCBOE volatility index, widely considered the best gauge of fear in the market, finished around 20.06.

IBM and 3M led the Dow. Alcoa and American Express were at the bottom of the pack.

The Dow, the S&P 500, and the Nasdaq are all on pace to chalk up their biggest yearly percentage gains since 2003, and with a gain of about 1.5 percent this week, the S&P would have its best annual advance since 1998. The major averages have advanced, albeit modestly, for five consecutive sessions.

Some encouraging news on the economic front: Midwest manufacturing activity rose in November to its highest in nearly a year, the Chicago Fed reported.

Today's $44 billion 2-year note auction was met with tepid demand. The high yield was 1.089 percent, above expectations. The bid-to-cover ratio was 2.91, above the recent average of 2.8, but foreign and large institutional investor demand was weak. That was to be expected, given that it's the end of the year. Still to come: A $42 billion 5-year auction on Tuesday and a $32 billion 7-year auction on Thursday.

Holiday sales (Nov. 1 to Dec. 24) rose 3.6 percentfrom last year, MasterCard's SpendingPulse report showed.

"This game of chicken that went on between retailers and shoppers, it looks like the retailers won," Stephen Massocca, managing director at Wedbush Morgan, told Reuters. "They held out, there weren't deep discounts prior to Christmas, and people actually came in and bought the merchandise, so that bodes well."

Among the season's early winners were Gap , Walmart and Amazon .

Gap and Walmart got out front with heavy discounts — about 60 percent of Gap's store space was devoted to discounted items, according to Wedbush store checks.

Amazon benefited from strong Kindle and e-book sales. The online retailer said its customers actually bought more e-books than physical bookson Christmas Day — the first time ever that's happened.

This week is expected to be another big one for retailers. January may be weaker than last year as many shoppers skipped the gift cards, instead searching for bargains on specific items.

Apple rose, after hitting an all-time high last Thursday, amid rumors that the company will soon be out with a tablet computer, popularly referred to as the "iPad."

Winterizing Your Portfolio - A CNBC Special Report
Winterizing Your Portfolio - A CNBC Special Report

Thomas Weisel also was out Monday with positive comments on Apple. The firm raised its estimate for the company's fiscal first quarter to $3.55 a share from $3.36 a share, citing strong demand for iPhones and iMacs.

AT&Tresumed selling the iPhonein New York Cityafter suspending sales to zip codes in the region over the weekend for reasons not yet known.

Whole Foods slipped following news that CEO John Mackey plans to give up his chairman title.

Resource stocks advanced as oil settled at $78.77 a barrel, after hitting a five-week high of $79.12, amid geopolitical tensions in Iran.

After rallying for the past five months, airline stocks were grounded as a botched terrorist attackover the holiday travel season led to tighter security procedures and worries about a decrease in travel.

Shares of Delta, the parent of Northwest Airlines, on which the incident occurred, fell more than 4 percent. Shares of AMR , parent of American Airlines also lost more than 4 percent.

Fannie Mae and Freddie Mac shares jumped more than 20 percent each (though they're dollar stocks) after the Treasury department lifted its limits on bailout funds for the mortgage-securities companies.

The market was also buzzing about a bold prediction that Warren Buffett will step downas CEO of Berkshire Hathaway next year.

The prediction came from Seabreeze Partners' Doug Kass, who, if you recall, successfully shorted Berkshire in 2008.

"With the Burlington Northern acquisition, the Oracle has basically completed his canvas and there's really very little left for him to do," Kass said as guest host of Squawk Box this morning.

Still to Come:

TUESDAY: Case-Shiller home-price index; consumer confidence; 5-year auction
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; 7-year auction
THURSDAY: Weekly jobless claims
FRIDAY: New Year's Day — all US financial markets closed

Send comments to cindy.perman@nbcuni.com.

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ALXN
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DAL
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FMCC
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GPS
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IBM
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MMM
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WMT
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MA
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AAPL
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