Santa Visits Wall Street

Ahead of the new session, a report circulated that Merrill Lynch (MER Quote) may become the latest investment bank to receive a cash boost from overseas funding. Singapore's Temasek Holdings is in talks with Merrill to deliver a $5 billion cash infusion, according to The Wall Street Journal. Shares of Merrill rose $1.04, or 1.9%, to $55.54.

Friday's gains came despite expectations of increased volatility during the expiration of four separate derivatives contracts, an event known as quadruple witching. Single-stock futures, stock options, index futures and index options all were trading for the last time. The simultaneous expiration happens quarterly and can lead to considerable volatility.

Amid the options expiration, the New York Stock Exchange said it set trading volume records during the first 30 and 60 minutes of the trading day. In the first half hour, the exchange saw 790 million shares traded, topping the old record of 704 million. During the first hour, the NYSE saw a record 903 million shares traded, beating the old record by more than 100 million

By the end of trading, volume on the NYSE hit 4.37 billion shares, with advancers beating decliners by a 3-to-1 margin. On the Nasdaq, volume touched 2.46 billion shares as winners outpaced losers 2 to 1.

Elsewhere on the economic front, the University of Michigan revised its final read of its consumer sentiment index for December to 75.5. Economists had expected no revision from the preliminary read of 74.5.

U.S. Treasurys were tumbling. The 10-year note was down 28/32 in price, pushing the yield to 4.16%. The 30-year bond was losing 1-21/32 in price, yielding 4.58%.

Commodity prices climbed. Crude oil was up $2.25 to close at $93.31 a barrel, and gold and silver futures finished sharply higher.

In other corporate news, shares of Circuit City (CC Quote) plunged 28.7% early after the retailer posted a much wider-than-expected third-quarter loss. Shares were down $1.91 to $4.75.

Walgreen (WAG Quote), on the other hand, traded higher after posting a fiscal first-quarter profit that rose almost 6% from a year ago. Walgreen climbed $2.22, or 6.1%, to end at $38.47.

Overseas markets rallied overnight. In Asia, Hong Kong's Hang Seng jumped 2.3% and Japan's Nikkei 225 added 1.5%. Among European bourses, London's FTSE 100 tacked on 1.4% and Germany's Xetra Dax was up 1.7%.