NEW YORK (CNN/Money) -
U.S. stocks closed higher on the session Friday and for the week, with the Dow industrials managing to sustain and muscle above 10,000, a key psychological barrier.
The Dow Jones industrial average (up 34.00 to 10042.16, Charts), the S&P 500 (up 2.93 to 1074.14, Charts) and the Nasdaq composite (up 6.68 to 1949.00, Charts) all gained around 0.3 percent on the session.
The averages were shaky in the morning, as investors absorbed a weaker-than-expected first read on December consumer sentiment from the University of Michigan. But momentum built up throughout the afternoon, with the Dow and the S&P 500 managing to close at fresh 18-month highs for the second session in a row.
The Dow closed Friday at its best level since May 24, 2002, when it closed at 10,104.26, while the S&P 500 closed at its best level since May 28, 2002, when it closed at 1,074.55.
The Dow and the S&P 500 both closed higher for the third week in a row, while the Nasdaq closed higher for the second week in three.
For the week, the Dow added 1.8 percent, the S&P 500 added 1.2 percent and the Nasdaq composite added 0.6 percent.
The market rally's big driver this year, the Nasdaq, of late has been losing steam, said Barry Ritholtz, a market strategist at Maxim Group, and that's a trend that could continue next week and through the end of the year.
"People are looking at this huge run a lot of these stocks have had and are thinking that maybe now is the time to rotate into some of the sectors that have more room to gain," Ritholtz said. "On the Dow, some of the cyclicals have gotten ahead of themselves, 3M for example. You're going to need the heavy lifters like GM or GE to start showing the leadership."
This rotational switch is especially likely to kick in during early January, Ritholtz added, with some investors holding this year's winners until the start of 2004 so they can put off paying taxes on any sales.
"Whether we build on the 10,000 or not, I think the market is in good shape and I expect it to keep moving higher through the end of the year," said Jon Burnham, portfolio manager at Burnham Securities.
For the first time in weeks, a big market-moving earnings report is due Monday. After the close of trade, business software behemoth Oracle (ORCL: Research, Estimates) is expected to post earnings of 11 cents per share, a penny more than a year earlier, according to Reuters Research.
Monday's only economic report is the NY Empire State index, a regional manufacturing read that can often have an impact on trade in the early going. The December index, due out before trading begins, is expected to fall to 35.0 from 41.0 last month.
Reports are due later in the week on consumer prices, building permits and housing starts, among others.
On the move
United Technologies (UTX: up $2.33 to $91.60, Research, Estimates) gained 2.6 percent after the company reiterated its earnings and revenue targets for 2004 late Thursday, at the end of its meeting with analysts. On Friday, Prudential upgraded the stock to "overweight" from "neutral."
Coca-Cola (KO: up $0.98 to $49.37, Research, Estimates) added 2 percent after the company made some bullish comments about its business in 2004 at a meeting with analysts Friday. The company also said it will sharply increase its stock buyback program next year, often a sign of corporate confidence.
General Motors (GM: up $0.86 to $49.79, Research, Estimates) rose 1.7 percent following news reports that the automaker expects to nearly close this year the $19.3 billion gap in its U.S. pension plan, which had been a substantial burden on the company's earnings and debt rating.
Shares of International Steel (ISG: Research, Estimates) rallied 25.7 percent on its first day of trading as a public company. The stock rose $7.20 up to $35.20 from its initial public offering price of $28, which was set late Thursday.
On the downside, AT&T (T: down $0.64 to $18.98, Research, Estimates) lost 3.2 percent after saying late Thursday that it would cut 12 percent of its work force by year-end, rather than the 10 percent it initially said, due to pricing pressure and its struggle to stay competitive.
Among the decliners, Johnson & Johnson (JNJ: down $0.61 to $49.39, Research, Estimates) lost 1.2 percent after one of the drugmaker's units received a subpoena from the U.S. District Attorney's office in Boston regarding the sale and marketing of its epilepsy treatment.
Fellow Dow stock Boeing (BA: down $0.19 to $39.37, Research, Estimates) shed 0.5 percent following a Wall Street Journal article that said U.S. prosecutors have begun a new criminal investigation involving the aircraft maker.
Market breadth was positive. On the New York Stock Exchange, winners beat losers eleven to five as 1.21 billion shares traded, while on the Nasdaq composite, winners beat losers by more than three to two as 1.44 billion shares changed hands.
The University of Michigan's preliminary reading on consumer sentiment in December showed a drop to 89.6 from 93.7 the previous month. Economists were expecting a rise to 96.0. The surprise shook the market, initially sending the major indexes lower before they bounced back. The news overshadowed the positive surprise of the morning's drop in wholesale prices.
The producer price index, a measure of wholesale inflation, fell 0.3 percent following an 0.8 percent gain in October. Economists were expecting a rise. A separate report also showed that the U.S. trade gap widened due to a record number of imports, but investors paid little heed.
Treasury prices were slightly weaker, with the yield on the 10-year note at 4.24 percent. The dollar edged lower against the yen and euro.
Light crude oil futures rose $1.20 to settle at $32.95 a barrel on the NYMEX. COMEX gold gained $4.70 to settle at $410.10.
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