Stocks end higher
Major indexes rise in quiet trading as investors mull the latest economic data. Markets to close early.
NEW YORK (CNNMoney.com) -- Stocks rose Wednesday, ending a holiday-shortened session on a high note, as investors picked through a raft of reports on the economy.
The Dow Jones industrial average (INDU) and the broader Standard & Poor's 500 (SPX) index were both up nearly 0.6% according to early tallies. The Nasdaq composite (COMP) advanced almost 0.2%.
Stocks fell Tuesday after two housing reports showed declines in sales of new and existing homes. A government report also showed the economy contracted in line with economists' expectations.
Banking stocks advanced with Citigroup (C, Fortune 500) adding nearly 4% and Bank of America (BAC, Fortune 500) up more than 5%. Shares of General Motors (GM, Fortune 500), which have been beaten down recently, rose more than 7%.
Oil prices fell after the government reported an unexpected decline in crude inventories. Prices for U.S. Treasury bonds fell after several auctions earlier this week.
Trading has been light all week with many investors on vacation. U.S. stock markets closed two hours early Wednesday and will remain shut on Thursday for the Christmas holiday.
In addition to light participation, many investors have closed their books for the year and are not planning to make any large moves until 2009.
Still, the market had a full roster of economic reports to digest, including one that showed a spike in jobless claims and another weak reading on personal spending.
"I think we'll continue to see unemployment rise and continue to see consumer spending drop," said Dean Barber, president of Barber Financial Group in Kansas City, Kan. These declines, combined with a high level of consumer debt, could result in a "prolonged and painful scenario" for the economy, he added.
Barber said he expects the Dow to retest its November lows in the weeks ahead, and that it could bottom out around 5,000 sometime in 2010.
"The market has factored in some bad news, but there's a lot out there that people don't really understand yet," he said.
Jobs: Before the opening bell, the Labor Department said weekly claims for unemployment benefits rose more than expected.
New jobless claims rose to 586,000 in the week ended Dec. 20. That's an increase of 30,000 from the previous week's revised figure of 556,000, and is more than the 558,000 total forecast by economists.
Wednesday's report revealed the highest number of jobless claims since Nov. 27, 1982, when initial filings hit 612,000.
Income and spending: The Commerce Department said both personal income and spending decreased in November.
Personal income dipped 0.2% after a modest 0.3% increase in October. The reading was expected to be flat.
Personal spending fell 0.6% versus a decline of 1% the month before. But the figure was better than the 0.8% decline that economists were expecting.
Durable goods: New orders of durable manufactured goods fell for the fourth month in a row, according to the Census Bureau.
Durable goods orders fell 1% to $1.9 billion in November. Excluding orders related to transportation, new orders increased 1.2%.
Still, the decline was not as sharp as had been expected. Economists had forecast durable goods orders to sink 3.1% after plummeting 6.2% in October - the biggest decline since 2006.
Sam Bullard, an economist at Wachovia Economics Group, said the decline "suggests order growth for durable goods should remain challenged throughout 2009."
Mortgages: As mortgage rates fall, applications for home loans and refinancing activity surged last week, according to the Mortgage Bankers Association.
The MBA's overall Market Composite Index, a measure of mortgage loan application volume, shot up 48% on a seasonally adjusted basis for the week ending Dec. 19.
The increase was driven by a 62.6% jump in the group's Refinance Index. But the Conventional Purchase Index also increased 17.7%. The only component of the overall index to fall was the Government Purchase Index, which largely tracks FHA loans, which slipped 3.4%.
Bonds: The benchmark 10-year note fell 3/32 to 114 31/32, and its yield held steady at 2.17%. The 10-year yield dipped below 3% in November for the first time since the note was first issued in 1962.
Lending rates were mixed. The 3-month Libor rate held steady at 1.47%, according to Bloomberg. The overnight Libor edged up to 0.15% from 0.12% Tuesday. Libor is a key bank lending rate.
Other markets: In global trading, Asian markets ended lower with the Hang Seng in Hong Kong falling 0.26%. Major indexes in Europe fell in a holiday-shortened session. The DAX index in Frankfurt was closed.
The dollar fell versus the euro and the yen.
U.S. light crude oil for February delivery was down $1.32 at $37.64 a barrel in New York. Crude prices fell sharply after the government reported an unexpected decline in crude inventories.
COMEX gold for February delivery was up $11.30 to $849.60 an ounce.
Gasoline prices fell overnight to a national average of $1.655 from $1.659 a gallon, according to a survey of credit-card swipes released Monday by motorist group AAA.
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