The Market Story

Return to Article

Bulls Spring Into Action

Robert Holmes

Buyers came off the sidelines Thursday and bid up U.S. stocks despite a sizable advance in the price of crude oil, lifting the Dow Jones Industrial Average to its best-ever finish.

After a sluggish start, the Dow took off and closed higher by 99.26 points, or 0.81%, at 12,416.76, marking another record in a quarter that's seen the index repeatedly set new benchmarks.

Only three of its 30 components failed to end in positive territory. Pacing the industrials were American Express (AXP Quote) and DuPont (DD Quote), both of which added more than 2.7%.

United Technologies (UTX Quote) was one of few drags, falling 3.4%.

Meanwhile, the S&P 500 rose 12.28 points, or 0.87%, to 1425.49, its highest level in six years, and the Nasdaq Composite was up 21.44 points, or 0.88%, to 2453.85.

About 2.77 billion shares changed hands on the New York Stock Exchange, and advancers outpaced decliners by a 5-to-3 margin. Volume on the Nasdaq was roughly 1.96 billion shares, with winners beating losers 3 to 2.

"It's the end of the year, and we're seeing that Santa Claus rally we heard so much about," said Art Hogan, chief market analyst with Jefferies. "The path of least resistance is to the upside in the absence of a negative catalyst. There was no corporate news or any news otherwise that could stop the advance. There's a lack of sellers."

Gains by the major indices came even as OPEC ministers have decided to again reduce production, this time by 500,000 barrels a day in February. Earlier this fall, OPEC said it was lowering output by 1.2 million barrels a day in order to prop up prices, but many analysts aren't convinced the implemented curtailment has actually been that steep.

At any rate, the prospects of less supply on the market had oil finishing higher by $1.14 at $62.51 a barrel. Other energy contracts and precious metals finished the session narrowly mixed.

Back in the U.S., Lehman Brothers (LEH Quote) and Bear Stearns (BSC Quote) posted strong quarterly numbers. Earnings at Bear Stearns rose 38% from a year ago, while Lehman's profit was up 22% in the quarter ended Nov. 30.

Shares of Lehman Brothers eased 0.4% to $76.08, while Bear Stearns rose 2.6% to close at $159.96.

Earlier this week, Goldman Sachs (GS Quote) reported 93% year-over-year profit growth for the fourth quarter.

Also among earnings, wholesale retailer Costco (COST Quote) posted fiscal first-quarter net income of $236.9 million, or 51 cents a share, up 10% from a year ago. Quarterly revenue rose to $14.15 billion from $12.93 billion last year. The Thomson First Call consensus was for earnings of 50 cents a share on revenue of $14.06 billion. Costco added 97 cents, or 1.8%, to $54.11.

During a much-anticipated investor conference, Citigroup (C Quote) CEO Chuck Prince said he, just like many investors, is "frustrated'' with the performance of the bank's stock. However, he made it clear there will be no deviation from the strategy's he's been following for the past three years at the nation's largest bank.

Prince says Citigroup will continue to focus on international acquisitions, and he doesn't foresee making a major U.S. bank acquisition next year. Some critics have said Citigroup needs to expand its retail banking presence domestically. Shares of Citigroup gained 79 cents, or 1.5%, to close at $53.11.

On the economic front, the Labor Department said its import price index rose 0.2% in November, compared with expectations for no change. Imported petroleum prices fell 1.6% last month, but natural gas prices surged by more than 30%. Excluding petroleum, import prices were up 0.7% for the month.

Separately, the government said initial jobless claims fell by 20,000 to 304,000 last week. The less volatile four-week moving average fell by 1,500 to 327,250 claims.

Treasuries eased, with the 10-year note down 3/32 in price to yield 4.59%. The 30-year bond was sinking 9/32 and yielding 4.72%. The dollar was higher against the euro and the yen.

Overseas, European markets were moderately stronger. London's FTSE 100 was up 0.6% to 6228, and Frankfurt's Xetra DAX added 0.5% to 6552. Asia's shares rose overnight. The Nikkei gained 0.8% to 16,829 and the Hang Seng was ahead by 1.1% to 18,919.