LOS ANGELES — The strong start to the holiday shopping season finally injected some confidence into a recession-wary Wall Street, sending major market indexes barreling higher in what has been a brutal November for stocks.
Investors were encouraged with reports that a record number of shoppers poured into malls and shopping centers around the country over Thanksgiving weekend, which has historically been the biggest time of the year for U.S. retailers.
Sales during Black Friday are crucial for Wall Street since consumer spending accounts for 70 percent of the economy, and sales figures helped assuage fears building since the summer that the U.S. could be close to falling back into a recession.
Retail stocks helped power a big rebound for the market Monday, with the broad Standard & Poor's 500 index snapping a seven-day losing streak by closing up 33.88 points, or 2.9 percent, at 1,192.55 points. The S&P retail index, made up of 30 components including Tiffany and Sears, jumped 3.1 percent during the session. Meanwhile, the Dow Jones industrial average rose 291.23 points, or 2.6 percent, to 11,523.01 points, bouncing back from a nearly 1,000-point drubbing this month.
The question remains whether the momentum can continue as the holiday shopping season goes on — especially with a number of key economic snapshots due out this week that include readings on consumer confidence and jobless claims.
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"Extrapolating the entire holiday season from one day of incentive-induced sales can be very misleading, especially when the pace of spending appears completely out of line with the fundamentals of household employment, income and confidence," said Steven Ricchiuto, an analyst with Mizuho Securities.
Shoppers shelled out $52.4 billion from Thanksgiving Day through Sunday, a 16.4 percent surge from $45 billion last year, according to the National Retail Federation. Each shopper on average spent $398.62, a 9.1 percent bump from last year, and more were willing to buy gifts for themselves on top of presents for family and friends.
Retail stocks rose solidly. Nordstrom jumped $1.13, or 2.6 percent, to $45.19; Tiffany surged $4.12, or 5.9 percent, to $73.62; and Coach rocketed $3.88, or 6.7 percent, to $62.13. Target rose 42 cents, or 0.8 percent, to $51.63.
The shopping frenzy appeared to continue beyond the weekend with encouraging initial sales figures for so-called Cyber Monday, which is traditionally the opening bell for online spending during the holidays.
The Cyber Monday data helped push the technology-heavy Nasdaq composite index up 85.83 points, or 3.5 percent, to 2,527.34 points, after its 5.1 percent slump last week.
Although Black Friday was the biggest on record, analysts cautioned that it was too soon to tell whether the momentum would carry through to the rest of the holiday season, a make-or-break period for many retailers, who often generate 25 percent to 40 percent of their annual sales during the last two months of the year.
"If retailers offered incredible deals, consumers were willing to buy," said Britt Beemer of consumer behavior firm America's Research Group. "A lot of consumers haven't bought anything for themselves for the last three or four Christmases."
Beemer said research from his company showed that 12.6 percent of those surveyed had finished all their holiday shopping on Black Friday, up from 8.3 percent of shoppers last year.
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"That tells you the economic straits of the American consumer," he said. "If they can get that laptop or TV for Christmas on Black Friday, that will be it for them."
Beyond just the U.S. economy, investors are also seeing some encouraging signs in Europe. Global markets got a boost from reports that Germany and France are drawing up plans that would commit European Union members to greater fiscal unity. That raised hope that European lawmakers may address a key underlying cause of the continent's financial problems: the absence of a workable mechanism forcing countries in the 17-nation eurozone to exercise strict budgetary discipline.
Wall Street took heart as European markets rebounded after diving last week. The stock market was helped by government bond yields easing in most eurozone countries. Share prices surged throughout Europe, with Germany's benchmark stock index jumping 4.6 percent and France's leaping 5.5 percent.
"Overall, there appears to be a sense of greater urgency among eurozone leaders after some very worrisome developments last week," said Kathy Lien, director of currency research at GFT in Jersey City, N.J.
That gives policymakers some breathing room as they try to contain the spreading debt crisis. Eurozone finance ministers meet Tuesday and European Union finance ministers meet Wednesday.
Still, stocks have repeatedly surged in recent months on reports of progress in Europe, only to falter again when investors studied the details and concluded that there was no immediate solution to the debt overhang in many countries.
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Earlier in the day, the Organization for Economic Cooperation and Development called for "urgent action" to stop the European debt crisis, warning that it is the key risk to the world economy.
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"Concerns about sovereign debt sustainability are becoming increasingly widespread," the OECD said in releasing its annual economic outlook in Paris. "If not addressed, recent contagion to countries thought to have relatively solid public finances could massively escalate economic disruption."
The OECD is an organization of 34 countries, including the U.S., Japan, Canada and most of Europe, that promotes policies to improve economic and social conditions worldwide.
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After the market closed, Fitch Ratings reaffirmed its AAA rating for U.S. government debt, but revised its long-term outlook to negative because of the failure of the congressional supercommittee to agree to deficit cutting measures.
Fitch said the U.S. retained its top rating because of "still strong economic and credit fundamentals," including the dollar's status as the world's reserve currency. But the ratings company downgraded its long-term outlook from stable because of "declining confidence" that policymakers will enact "timely fiscal measures necessary to place U.S. public finances on a sustainable path."
The outlook downgrade means that there is a slightly greater than 50 percent chance that Fitch will downgrade the U.S. credit rating over the next two years.
Monday's rally also may have been paced by so-called short covering, in which traders who had borrowed stock and sold it, betting on further declines, closed out their wagers once the market turned up.
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(Nathaniel Popper, Tom Petruno and Jim Puzzanghera of the Los Angeles Times contributed to this report.)
