U.S. Stocks Charge Higher in Pre-Thanksgiving Day Rally

Updated from 1:38 p.m. EST

Stocks in the U.S. had earlier been hit by a series of gloomy economic reports, but were lately staging an upswing as traders looked ahead to the Thanksgiving holiday and digested President-elect Barack Obama's nomination of former Federal Reserve Chairman Paul Volcker to his economic team.

The Dow Jones Industrial Average, down some 168 points earlier, was lately up 212 points at 8692, and the S&P 500 was adding 27 points at 885. The Nasdaq was leading the move higher with a gain of 62 points at 1526.

"In the period pre-Thanksgiving and after Thanksgiving, the market generally acts pretty well," said Bruce Zaro, chief technical strategist at Delta Global Advisors. He said that the market rallied about 20% from its Oct. 10 low into Election Day, and he sees the recent upward movement in stocks as a second iteration of that event.

"The net result will probably be a sideways pattern until we get some concrete evidence that there is some life in the economy," said Zaro. He said that there is additional bad news on what is shaping up to be an ugly Christmas season. "The fourth quarter is going to fall off a cliff, and those numbers start coming out in January." He said he foresees a February rally, as the market begins to look past the economic downturn.

For the moment, economic releases remained tinged with bearish sentiment.

• The Census Bureau reported that durable-goods orders declined 6.2% in October, a bigger drop than the 2.5% expected by economists. The September figure was revised down to a 0.2% decline from a 0.8% increase.
• The Chicago Purchasing Managers Association's index of manufacturing activity came in at 33.8, well below the consensus estimate of 38.5 and down sharply from October's read of 37.8.
• October new-home sales data from the Department of Commerce showed a bigger-than-expected decline to an annual rate of 433,000 homes, the slowest rate of sale since January 1991.
• The Commerce Department's read on personal income showed a 0.3% uptick for October. Analysts had forecast a income growth of 0.1%. Spending slowed by 1%, its broadest decline since September 2001.
• A consumer-sentiment survey from the University of Michigan yielded a read of 55.3, another sharp decline from the previous month.
• In one positive development, weekly initial jobless claims data from the Census Bureau showed claims were down 14,000 to 529,000 for the week ended Nov. 22. The previous claims figures were revised up by 1,000 to 543,000.

"I think most of these bad numbers are baked in," said Larry Adam, chief investment strategist at Deutsche Bank. He said that although many of the data releases were weaker than analysts had expected, they are consistent with what the market has seen since October. "When the numbers get a little bit less bad ... I think that'll actually help the market."