Stocks advanced Monday, with retailers ringing up gains after a report showed the holiday-shopping season was better than expected.
Resource stocks also advanced as oil hit its highest level in a month, topping $79 a barrel. But airline stocks skidded amid worries about security after an incident during the height of holiday travel last week.
Some encouraging news on the economic front: Midwest manufacturing activity rose in November to its highest in nearly a year, the Chicago Fed reported.
Volume was expected to be lighter than usual, given this second-straight holiday-shortened week. All US financial markets are closed Friday for the New Year holiday.
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.
One factor in determining the stock market's mood will be the success of $118 billion in Treasury auctions this week. The Treasury will sell $44 billion in 2-Year Notes Monday, with the results available shortly after 1 pm New York time. Tuesday will see the same of $42 billion in 5-Year Notes, while $32 billion in 7-Year Notes will be sold on Thursday.
IBM and 3M led the Dow. Alcoa and American Express were at the bottom of the pack.
Retail stocks rallied after MasterCard'sSpendingPulse report showed holiday sales (Nov. 1 to Dec. 24) rose 3.6 percentfrom last year.
"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."