Consumer confidence spurs Wall Street

Wall Street resumed its year-end rally today, bolstered by a new report which showed consumer confidence had jumped sharply in recent weeks.

All three major indexes reached new multi-year highs in light holiday-week trading.

Investors welcomed the latest reading of the Conference Board consumer confidence index, which rose to 102.3 in December from 92.6 in November. Wall Street had expected a reading of 94.

In a trading week that traditionally carries little news, the better-than-expected reading had a stronger-than-usual influence on trading.

While the dollar reached another new low against the euro, falling crude oil futures helped boost investor sentiment and reverse yesterday’s losses. Oil prices stabilised after falling 7% yesterday.

“The consumer confidence figure was very telling, confirming what we’ve seen in consumer spending and job growth,” said Kevin Caron, market strategist for Ryan, Beck & Co. “And we’re seeing energy prices cooperate nicely as well.”

The Dow Jones industrial average rose 78.41, or 0.73%, to 10,854.54, surpassing the previous three and a half year set on Thursday. It was the best close for the Dow since June 13, 2001.

Broader stock indicators were moderately higher. The Standard & Poor’s 500 index was up 8.62, or 0.72%, at 1,213.54, the highest close for the index since August 3, 2001.

The Nasdaq composite index gained 22.97, or 1.07%, to 2,177.19, its best showing since June 8, 2001.

Stocks recovered from yesterday’s dip, when investors worried about the economic impact of the Asian earthquake disaster. Analysts said that while events may cause more pauses in the market’s recent rally, the overall upward trend in stocks would likely continue through January.

“The financial impact on the global economy and the US economy is likely to be minimal,” said James Wong, senior equity strategist at Payden & Rygel Investment Management, of the quake and resulting tsunamis. “And as for today, the consumer confidence numbers clearly had an impact. It shows the consumer is still very much in the ball game when it comes to driving the economy.”

Advancing issues outweighed decliners by nearly 3 to 1 on the New York Stock Exchange, where volume was very light.

The Russell 2000 index of smaller companies was up 10.23, or 1.59%, at 654.57, an all-time record high.