Dow jumps to record levels

Major gauges rise, with Dow flirting with new record trading highs after upbeat Nov. retail report, talk of mergers in airline industry; run up in Treasury bond yields limits gains.

NEW YORK ( -- Stocks bounced back Wednesday morning, following the previous session's Fed policy-induced selloff as investors welcomed strong November retail sales and eyed a couple possible mergers in the airline industry.

The Dow Jones industrial average (up 40.46 to 12,356.04, Charts) added around 0.3 percent in the early going, briefly hitting a record trading high before retreating.


The broader S&P 500 index (up 4.31 to 1,415.87, Charts) added about 0.3 percent as well. The tech-fueled Nasdaq (up 9.81 to 2,441.41, Charts) composite gained 0.4 percent.

Stocks slipped Tuesday after the Federal Reserve held interest rates unchanged, as expected, but issued discouraging comments about the housing market and the economic slowdown in its statement.

The statement seemed to dampen hopes that the central bank will begin cutting interest rates as soon as the first quarter of next year.

However, the tone turned positive again Wednesday, as investors welcomed a robust read on November retail sales.

Sales in November surged, the government reported Wednesday morning, in an encouraging start to the all-important holiday shopping period. Full story.

Among stock movers, air carriers were active. UAL (up $2.40 to $45.63, Charts)'s United Airlines and Continental (up $3.07 to $45.95, Charts) are reportedly in talks about a merger, according to published reports.

Additionally, AirTran (up $0.27 to $12.62, Charts) said it has made an offer to buy Midwest Air (up $2.09 to $11.17, Charts) for about $210 million in a deal that would merge the two regional air carriers.

Treasury prices tumbled, boosting the yield on the benchmark 10-year note to 4.54 percent from around 4.49 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar rose against the yen and euro.

U.S. light crude oil for January delivery fell 9 cents to $60.93 a barrel in electronic trading.

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