Investors cheer Santa Claus rally

NEW YORK (CNNMoney.com) -- Stocks rose Tuesday, in one of the last four trading sessions of the year, as falling oil prices helped offset a weak report on holiday retail sales.

The Dow Jones industrial average (up 64.41 to 12,407.63, Charts), the broader S&P 500 index (up 6.14 to 1,416.90, Charts) and the tech-heavy Nasdaq composite (up 12.33 to 2,413.51, Charts) all added around 0.5 percent.

The so-called Santa Claus rally that has lifted stocks this month got sidelined late last week when stocks had trouble finding momentum ahead of the holiday weekend.

But after markets closed Monday for Christmas, all three major gauges posted gains in thin trade Tuesday, despite reports that sales for the holiday shopping period grew about 6.6 percent this year - below last year's 8.7 percent increase.

Stocks historically post gains during the last few trading sessions of the year.

Fred Dickson, chief market analyst at D.A. Davidson & Co., credited falling oil prices for the session's newfound enthusiasm.

Light sweet crude oil sank $1.31 to $61.10 a barrel on the New York Mercantile Exchange as mild Northeast weather offset concerns about Iran's nuclear program.

Dickson also said the corporate takeover boom was partly responsible for turning investors' attention away from the disappointing year-end retail sales reports.

"Wall Street seems to be enveloped in merger mania and [investors have] lost sight of some of the primary economic indicators they are usually focused on," he said.

On the economic front, the Commerce Department's report on new home sales is due out Wednesday and existing home sales on Thursday. Friday brings Chicago PMI, a report on business activity in the Midwest in December.

Among the 30 stocks in the Dow, 26 rose and four fell with automaker GM (up $0.35 to $29.77, Charts) among the Dow's top gainers.

Stocks of oil majors, including Dow component ExxonMobil (up $0.64 to $76.05, Charts), ConocoPhillips (up $0.64 to $71.69, Charts), Chevron (up $0.36 to $73.09, Charts) and Royal Dutch Shell (up $0.48 to $69.90, Charts), were all higher, despite the sharp drop in crude prices.

On the downside, shares of major retailers struggled, with Federated Department Stores (down $0.33 to $37.76, Charts), Target (down $0.23 to $57.09, Charts) and Sears (down $1.11 to $166.63, Charts) down in afternoon trading.

Elsewhere, shares of Telik (down $11.49 to $4.77, Charts) plunged 70 percent after the drugmaker said its experimental cancer drug failed to improve survival in patients with advanced lung cancer or ovarian cancer.

After the closing bell, UnitedHealth (down $0.22 to $53.23, Charts) fell nearly 2 percent after the insurer said that securities regulators launched an investigation into its stock options practices.

And Monster Worldwide (up $0.13 to $46.33, Charts) zigzagged on Inet after the jobs Web site said it would record a one-time expense of $5 million in the fourth quarter.

Volume was light with many investors on vacation. Market breadth was positive. On the New York Stock Exchange, advancers topped decliners by a margin of two to one on volume of 800 million shares. On the Nasdaq, winners beat losers by a margin of three to two as 1 billion shares changed hands.

Treasury prices edged higher, with the yield on the 10-year note slipping to 4.60 percent from 4.62 percent on Friday. Bond prices and yields move in opposite directions.

The dollar was higher versus the euro and the yen.

COMEX gold added $4.60 to $626.90 an ounce.

Markets that were open closed mostly higher in Asia, but some markets were closed for Boxing Day, the holiday that follows Christmas. Major markets in Western Europe also were closed.

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