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NEW YORK (CNNMoney.com) -
Stocks staged a late-day rally Monday as strength in energy, financials, homebuilders and aerospace overshadowed worries about General Motors.
The Dow Jones industrial average (up 53.95 to 10,820.28, Charts) added 0.5 percent, pushing into positive territory for the year for the first time in eight months. The Dow 30 ended 2004 at 10,783.01.
The S&P 500 (up 6.58 to 1,254.85, Charts) index added 0.6 percent and the Nasdaq composite (up 13.99 to 2,241.67, Charts) added more than 0.6 percent. Both closed at fresh four-and-a-half-year highs.
A one-month advance sent the Nasdaq and S&P 500 to four-and-a-half-year highs Friday. After such a run-up, the major gauges drifted through most of Monday's session as investors showed caution amid GM's restructuring news.
But the rally resumed in the last hour of trade, led by strength in energy, homebuilders and financials. On the Dow 30, GM's decline was tempered by strength in Boeing and Exxon Mobil.
Dow component Boeing (up $2.05 to $69.00, Research) jumped 3 percent after it received $14.3 billion worth of aircraft orders during the Dubai Air Show. Its stock flew to a four-and-a-half-year high.
Fellow Dow stock Exxon Mobil (up $1.12 to $59.37, Research) gained almost 2 percent as part of a broad rally in the energy sector, which gained more than 2.5 percent on the session.
On the downside, GM slipped after it announced a massive restructuring. The company said it would cut about 30,000 jobs and will close or scale back about a dozen North American plants in a bid to save $7 billion a year.
The stock initially rose at the open but quickly retreated. Jack Ablin, chief investment officer at Harris Private Bank in Chicago, attributed the drop to concerns about the No. 1 automaker's dividend.
"I think that dividend is in jeopardy," he said. "How can you go to your unions and say you need to pull back when you're paying 8.5 percent to investors?"
The stock was pounded to an 18-year low last week amid bankruptcy speculation, which GM CEO Rick Wagoner has denied. Wagoner wouldn't speculate on what would happen to the dividend when asked by reporters during a conference call Monday morning.
Also influencing Monday's trade was a sharp jump in the October leading economic indicators.
"Between leading indicators and subdued inflation expectations, it's really set a nice backdrop for the market today," said Ablin.
Looking ahead
The holiday-shortened Thanksgiving week is fairly light on news.
The biggest event is likely the release of the minutes from the November Fed policy meeting, due Tuesday afternoon.
Despite the lack of news, the market could potentially see another upbeat week, according to statistical factors.
The Dow has historically managed gains right before and after Thanksgiving, even though it's typically a slow period on Wall Street, according to Stock Trader's Almanac.
December also looks promising, if more subdued.
"It's beginning to look like a replay of 2004, with everyone expecting a fourth-quarter rally and the rally commencing," said Todd Salamone, director of trading at Schaeffer's Investment Research
Other movers
American Express (up $0.99 to $50.90, Research) jumped 2 percent after brokerage UBS upgraded it to "buy" from "neutral."
That helped boost others in the financial sector.
Micron Technology (up $0.02 to $14.20, Research) and Intel (down $0.05 to $25.25, Research) announced they were forming a company to make flash memory chips, many of them for Apple (up $0.40 to $64.96, Research) to use in its lines of iPods. That news was part of a broader $1.2 billion deal announced by Apple to prepay for memory chips.
Rival flash memory maker SanDisk (down $9.36 to $46.84, Research) tumbled on the news. Brokerage Think Equity downgraded the stock on bets that the Micron and Intel partnership could hurt SanDisk.
Computer Sciences (down $6.47 to $48.38, Research) slumped almost 12 percent following reports that a group consisting of Lockheed Martin and three private equity firms have has given up its intention to buy the computer services company.
Lockheed (Research) shares rose on the news.
Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly five to three on volume of 1.55 billion shares. On the Nasdaq, advancers beat decliners by three to two on volume of 1.69 billion shares.
U.S. light crude oil for January delivery rose 49 cents to settle at $57.70 a barrel on the New York Mercantile Exchange.
Treasury prices rose, lowering the yield on the 10-year note to about 4.46 percent from 4.50 percent late Friday. Treasury prices and yields move in opposite directions.
The dollar rose versus the euro and fell versus the yen.
COMEX gold gained $3.30 to settle at $489.50 an ounce.
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