Wall Street kept up a broad winning streak today, giving blue chip stocks their fifth straight advance as investors looked for clues about whether dire predictions for the holiday shopping season would prove accurate.
The stock market closed three hours early the day after Thanksgiving and locked in gains of 9.7 % for the week for the Dow Jones industrial average and 12% for the broader Standard & Poor’s 500 index. The Nasdaq, which had moderate losses in recent sessions, still logged a weekly advance of 10.9%. It was the first time the Dow rose for five consecutive sessions since July 2007.
Analysts largely looked past today’s moves, however, as they came in light trading volume. A better test of market sentiment will come next week as traders return from the long weekend and as Wall Street digests a slew of economic data ranging from a reading on the manufacturing sector on Monday to the all-important employment report from the Labour Department on Friday.
But even with light trading volume during the week and at times only modest moves higher, Wall Street’s ability to continue its overall climb was welcome. Only last week, the S&P 500 posted its lowest close since 1997 and touched off another set of worries about how far the market would fall from its October 2007 peak.
But with President-elect Barack Obama starting to reassure the market late last week by naming an economic team and the government stepping in to prop up Citigroup, investors have found some reassurance that broad efforts are still being made to fight the financial crisis that intensified in September with the bankruptcy of Lehman Brothers Holdings.
Investors are now examining the prospects for the holiday shopping period, which began in earnest today. Wall Street expects retailers will suffer as consumers, nervous about a difficult job market, lower home values and a jittery stock market, grow more restrained in their spending this year. But some retail stocks rose Friday as some investors hoped the predictions have been overly dour. Macy’s added 5.6 %, though some discounters, like Wal-Mart Stores, slipped.
“You’ve seen all sorts of numbers that point to the fact that discretionary spending in the economy has come to an absolute halt,” said David Reilly, director of portfolio strategy at Rydex Investments.
A rare drop in year-over-year holiday spending would be troubling as it is the most important period of the year for most retailers and because consumer purchases account for more than two-thirds of US economic activity. But while some stores around the nation appeared busy Friday as shoppers looked for bargains, the early evidence was anecdotal and Wall Street would have to wait for cash register tallies.
“The discounting appears to be unbelievable,” said Reilly. “The retail sector is going to do whatever it can to get people through the door.”
The Dow Jones industrial average rose 102.43, or 1.17 %, to 8,829.04. It was the Dow’s longest string of advances since the period ended July 17, 2007 and the biggest percentage gain over five sessions since August 8, 1932.
Broader stock indicators also rose today. The Standard & Poor’s 500 index advanced 8.56, or 0.96%, to 896.24, while the Nasdaq composite index rose 3.47, or 0.23 %, to 1,535.57 after spending much of the session lower.
The Russell 2000 index of smaller companies rose 4.28, or 0.91%, to 473.14.
Government bonds were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.93 % from 2.99 % late on Wednesday. The yield on the three-month T-bill, considered one of the safest investments, edged up to 0.05 % from 0.03% on Wednesday.
Citigroup was by far the biggest gainer among the 30 stocks that make up the Dow industrials, rising 1.24, or 17.6%, to 8.29. Just a week ago, the bank’s stock was selling off precipitously, before the government put together a rescue plan for the bank.
Investors will be looking next week as Detroit’s major car makers send their restructuring plans to Capitol Hill by Tuesday in a bid to secure federal loans. General Motors rose 43 cents, or 8.9%, to 5.24 today, while Ford Motor rose 54 cents, or 25%, to 2.69. Chrysler LLC isn’t publicly traded.
Among the market’s movers today, financials rose while industrial companies like Caterpillar advanced 1.66, or 4.2%, to 40.99. Weakness in chip stocks curtailed the Nasdaq’s gains. Intel fell 17 cents to 13.80.
Advancing issues outpaced decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 787 million shares.