NEW YORK (CNN/Money) - Retail stocks helped Wall Street celebrate the arrival of the holiday shopping season, as major U.S. indexes rallied to finish Friday's abbreviated trading session and a holiday-shortened week higher.
"I like this rally, and even if this is a shortened day, we turned 'Black Friday' into 'Green Friday' on the New York Stock Exchange," Ned Riley, chief investment strategist at State Street Global Advisers told CNNfn's Street Sweep.
The gains helped the U.S. stock markets continue a more than two-month run-up, turning what had been a losing week into a modest winner.
The Dow Jones industrial average rose 125.03 points, or 1.3 percent, to 9,959.71 Friday. The Nasdaq composite index gained 28.15, or 1.5 percent, to 1,903.20. The Standard & Poor's 500 rose 13.31 points, or 1.2 percent, to end the day at 1,150.34.
For the week, the Dow finished up 0.9 percent, while the Nasdaq inched up 0.2 percent. The S&P 500 rose 1 percent for the week.
Market breadth was positive Friday in extremely light trading. Advancers edged decliners by nearly 3-to-1 on the New York Stock Exchange as 410 million shares changed hands. Nasdaq advancers led decliners by more than a 2-to-1 margin as 584 million shares traded.
In the currency markets, the dollar was up against the yen and down versus the euro. Treasury securities were mostly flat after erasing early gains.
Watching the checkouts
U.S. retailers reflected investors' hope that, with signs that the economy may be turning positive, consumers will flock to stores to do their year-end holiday shopping. Retail stocks have suffered following the Sept. 11 terrorist attacks and a weak economy.
Specialty retailers Kohl's (KSS: up $1.81 to $67.73, Research, Estimates), Kmart (KM: up $0.28 to $6.85, Research, Estimates), and May Department Stores (MA: Research, Estimates) led the sector gainers.
Discount retailers Wal-Mart Stores (WMT: up $0.68 to $55.80, Research, Estimates) Target (TGT: up $0.95 to $37.71, Research, Estimates), and Sears Roebuck (S: up $0.85 to $45.12, Research, Estimates) showed modest strength.
Outside the retail sector, RJ Reynolds Tobacco Holdings (RJR: down $0.40 to $56.40, Research, Estimates) agreed to buy Santa Fe Natural Tobacco Co., the maker of American Spirit cigarettes, for $320 million in cash. But Canada's cigarette maker Rothmans has five days to respond to the agreement under terms of a pact it has with Santa Fe.
Brokerage firm Goldman Sachs Group (GS: up $2.00 to $90.15, Research, Estimates) told Reuters that 867 job cuts highlighted in a Merrill Lynch research report were not new but part of a headcount reduction program announced at the end of the third quarter.
Growing optimism of an economic recovery amid tax and interest rate cuts, military advances in Afghanistan, and some consumer spending resiliency has contributed to a recent two-month run-up in the markets following the terrorist attacks.
"We've had a nice bounce back since Sept. 21," Gary Kaminsky, managing director with Neuberger Berman, told CNN's Market Call. "A lot of the momentum money has gone into the usual suspects, the big-cap tech names where the fundamentals continue to be fairly weak, but cash on the sidelines is getting back into the market."
But investors have remained skeptical about the sustainability of the advance, exhibited by a two-straight session decline this week.
Since Sept. 21, the Dow has bounced up more than 20 percent, while the Nasdaq has gained more than 32 percent.
"I think right now it's down the middle for those who think we see a recovery in the first half of 2002 and those who think we see a recovery in the second half," Kaminsky said. "In the next couple of weeks it will start to shape out which it's going to be."
Oil stocks reversed trend in late trading to turn positive. Among the stocks that made the turnaround were Dow component Exxon Mobil (XOM: up $0.56 to $38.44, Research, Estimates), ChevronTexaco, (CVX: up $0.50 to $86.58, Research, Estimates) and Royal Dutch (RD: up $0.70 to $49.90, Research, Estimates).
Declining oil prices have pressured stocks in the sector globally. Brent oil futures fell, although they rebounded off their lows, after Russia announced a much smaller-than-anticipated cut in oil production.
Among the key economic data scheduled to be delivered to investors next week is the Consumer Confidence Index for November. The Conference Board's survey is expected to show a rise to 86.5 from 85.5 in October. 
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