By TIM PARADIS
Associated Press
NEW YORK — Wall Street kept up a broad winning streak Friday, giving blue chip stocks their fifth straight advance as investors looked for clues about whether dire predictions for the holiday shopping season would prove accurate.
The stock market closed three hours early the day after Thanksgiving and locked in gains of 9.7 percent for the week for the Dow Jones industrial average and 12 percent for the broader Standard & Poor’s 500 index. The Nasdaq, which had moderate losses in recent sessions, still logged a weekly advance of 10.9 percent. It was the first time the Dow rose for five consecutive sessions since July 2007.
Analysts largely looked past Friday’s moves, however, as they came in light trading volume. A better test of market sentiment will come next week as traders return from the long weekend and as Wall Street digests a slew of economic data ranging from a reading on the manufacturing sector on Monday to the all-important employment report from the Labor Department on Friday.
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But even with light trading volume during the week and at times only modest moves higher, Wall Street’s ability to continue its overall climb was welcome. Only last week, the S&P 500 posted its lowest close since 1997 and touched off another set of worries about how far the market would fall from its October 2007 peak.
But with President-elect Barack Obama starting to reassure the market late last week by naming an economic team and the government stepping in to prop up Citigroup Inc., investors have found some reassurance that broad efforts are still being made to fight the financial crisis that intensified in September with the bankruptcy of Lehman Brothers Holdings Inc.
Investors are now examining the prospects for the holiday shopping period, which began in earnest Friday. Wall Street expects retailers will suffer as consumers, nervous about a difficult job market, lower home values and a jittery stock market, grow more restrained in their spending this year. But some retail stocks rose Friday as some investors hoped the predictions have been overly dour. Macy’s Inc. added 5.6 percent, though some discounters, like Wal-Mart Stores Inc., slipped.
"You’ve seen all sorts of numbers that point to the fact that discretionary spending in the economy has come to an absolute halt," said David Reilly, director of portfolio strategy at Rydex Investments.
A rare drop in year-over-year holiday spending would be troubling as it is the most important period of the year for most retailers and because consumer purchases account for more than two-thirds of U.S. economic activity. But while some stores around the nation appeared busy Friday as shoppers looked for bargains, the early evidence was anecdotal and Wall Street would have to wait for cash register tallies.
"The discounting appears to be unbelievable," said Reilly. "The retail sector is going to do whatever it can to get people through the door."
Reilly said investors likely would remain nervous as they try to estimate how long the economy will remain weak.
"I think the market is still in the process of adjusting to the fact that we’re in a very difficult recession."
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According to preliminary calculations, the Dow Jones industrial average rose 102.43, or 1.17 percent, to 8,829.04. It was the Dow’s longest string of advances since the period ended July 17, 2007 and the biggest percentage gain over five sessions since Aug. 8, 1932.
Broader stock indicators also rose Friday. The Standard & Poor’s 500 index advanced 8.56, or 0.96 percent, to 896.24, while the Nasdaq composite index rose 3.47, or 0.23 percent, to 1,535.57 after spending much of the session lower.
The Russell 2000 index of smaller companies rose 4.28, or 0.91 percent, to 473.14.
Government bonds were mixed Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.93 percent from 2.99 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, edged up to 0.05 percent from 0.03 percent Wednesday.
Citigroup was by far the biggest gainer among the 30 stocks that make up the Dow industrials, rising $1.24, or 17.6 percent, to $8.29. Just a week ago, the bank’s stock was selling off precipitously, before the government put together a rescue plan for the bank.
Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, noted that the day after Thanksgiving is historically a winning day for the market and that next week’s economic readings should offer fresh insight into how much the economy has suffered from the evaporation of credit that began in September with the collapse of Lehman Brothers. Financial troubles at Lehman and elsewhere made banks hesitant to make loans to each other as well as businesses and consumers for fear of not being repaid.
Detrick said the recent bounce resembles those seen in October when the market stormed higher on relatively light volume only to retreat in the face of gloomy economic readings. Market advances on light volume can indicate that there are simply fewer sellers rather than a strong number of buyers snapping up stocks with conviction.
"We’re looking at this like not much more than a light-volume, bear market bounce," he said. "They go away just as quickly as they happen, unfortunately."
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He said the holiday shopping season likely will prove a weak one and that Wall Street will need to see some improvement in economic data before it is likely to put together a lasting rally.
Investors also will be looking next week as Detroit’s major automakers send their restructuring plans to Capitol Hill by Tuesday in a bid to secure federal loans. General Motors Corp. rose 43 cents, or 8.9 percent, to $5.24 Friday, while Ford Motor Co. rose 54 cents, or 25 percent, to $2.69. Chrysler LLC isn’t publicly traded.
Among the market’s movers Friday, financials rose while industrial companies like Caterpillar Inc. advanced $1.66, or 4.2 percent, to $40.99. Weakness in chip stocks curtailed the Nasdaq’s gains. Intel Corp. fell 17 cents to $13.80.
The dollar mostly rose against other major currencies, while gold prices rose.
Light, sweet crude rose $1.08 to $55.52 per barrel on the New York Mercantile Exchange.
Advancing issues outpaced decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 787 million shares.
Overseas, Japan’s Nikkei stock average fell 0.23 percent. Stocks in India rose a day after trading was suspended because of the terrorist attacks in Mumbai, the country’s financial capital. The Sensex Index ended the day with an advance of 0.7 percent.
Britain’s FTSE index rose 1.46 percent, Germany’s DAX index rose 0.09 percent, and France’s CAC-40 advanced 0.38 percent.
