Stocks End Higher on Christmas Surge

NEW YORK (TheStreet) -- Silence out of Europe and a second day of positive economic data in the U.S. proved to be an early Christmas gift for investors, with stocks closing out the week on a high note.

The Dow Jones Industrial Average ended the day up 124 points, or 1%, at 12,294. All but four components -- Alcoa (AA), Boeing (BA), Hewlett-Packard (HPQ) and JPMorgan Chase (JPM) -- traded higher on the index. Cisco (CSCO), Walt Disney (DIS) and Bank of America (BAC) led gains.

The S&P 500 added 11.3 points, or 0.9%, at 1265 and the Nasdaq rose 19 points, or 0.7%, at 2618.

Investors cheered a decision from the House of Representatives and the Senate to temporarily extend a payroll tax cut by two months. Lawmakers have been stuck in a deadlock as Republicans said that such a measure to only kick the can down the road.

Market sentiment was positive despite some lackluster economic releases. This comes after improving jobless claims and consumer sentiment figures helped fuel optimism about the U.S. economy Thursday.

Orders for long-lasting U.S. goods rose 3.8% in November, according to a Commerce Department report, better than the 2% expected from economists polled by Thomson Reuters. Orders for transportation equipment helped total orders rise the most since July. The read on the prior month's orders, however, was downwardly revised to no growth. Excluding cars, orders rose 0.3% in November adding to an upwardly revised 1.5% in October. Economists had forecast a rise to 0.5%.

In a separate report, the Commerce Department said personal income and spending in November both edged up 0.1%, disappointing estimates. The consensus was for incomes to rise by 0.2% and spending to rise by 0.3%. In the prior month, incomes tacked on 0.4%.

New home sales rose to a seven-month high in November, coming in at 315,000 at an annualized rate. The reading topped the 313,000 forecast by economists. October sales registered at a revised rate of 307,000. The report adds to hopes that the housing market is bottoming out and may be headed toward a recovery.

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Germany's DAX closed up 0.4%, while London's FTSE rose 1%. Overnight, Japan's Nikkei Average settled 0.8% lower, and Hong Kong's Hang Seng Index closed up 1.37%.

On Thursday, the Dow and S&P 500 extended gains for a third straight day, adding to the common belief in the so-called Santa Claus rally of year's end. Most of the exuberance seemed to be fueled by positive data points from the U.S. as well as a lack of negative headlines out of Europe.

The latest from across the pond is that the European Central Bank agreed to provide some liquidity to the eurozone financial system and that Italy is on its way toward stricter fiscal rules in the future after passing an austerity plan Thursday.

"Coming back from the Christmas holiday weekend, we expect to see the stock market drift up heading into the New Year weekend, unless we get another round of unexpected bad news from Europe," said Fred Dickson, chief investment strategist with D.A. Davison & Co.

In corporate news, a unit of General Electric (GE) has admitted to illegal anticompetitive activity in the municipal bond market and will pay a total $70 million in penalties, disgorgement of illegal profits and restitution to federal and state agencies. The GE unit, known as GE Funding Capital Market Services, will pay a total of $70.35 million, including $24.9 million to the SEC; $11.2 million to the IRS; $34.25 million to the group of state attorneys general. Of those funds, $54.9 million will be available for distribution to those municipalities and other tax-exempt issuers eligible to recover under the terms of the settlements, according to a GE press release.

Broadcom (BRCM) and Rambus (RMBS) reached a patent licensing agreement. The five-year deal covers the use of Rambus-patented technology in Broadcom chips, and resolves a litigation between the two parties. Rambus shares rose 12% to $8.20.

Shutterfly (SFLY), the photo sharing Web site, lowered its fourth-quarter revenue guidance. Shutterfly said Friday it expects revenue of $259 million to $264 million; it previously forecast revenue of $270.5 million to $275.5 million. Analysts surveyed by Thomson Reuters expect Shutterfly to post fourth-quarter revenue of $267.76 million. Shutterfly expects adjusted earnings before interest, taxes, depreciation and amortization of $84 million to $88 million, down from its previous forecast of $96.3 million to $101.1 million. Shares closed down 4.5% to $23.95.

American International Group (AIG) CEO Robert Benmosche has told the insurance company's board he would like to remain as CEO longer than previously planned, The Wall Street Journal reported. Benmosche, 67 years old, told the newspaper he plans to run AIG beyond next year, his health permitting. He was diagnosed with cancer in late 2010 and had previously indicated he would retire sometime in 2012.

AT&T's (T) $1.93 billion purchase of unused wireless spectrum from Qualcomm (QCOM) was approved by the Federal Communications Commission. AT&T bought the spectrum to add capacity to its fourth-generation, or 4G network.

Netflix's (NFLX) major blunders in 2011 may have cost CEO Reed Hastings a chunk of change in 2012. According to a Securities and Exchange Commission filing, Hastings will receive an annual salary of $500,000 on top of stock option allowance of $1.5 million in the coming year. In 2011, Hastings earned $500,000 and received an annual stock option allowance of $3 million. Shares fell 1.6% to $72.60.

On Friday, the dollar index rose 0.1%. The benchmark 10-year Treasury fell 23/32, pushing the yield to 2.031%.

February oil futures settled up 15 cents at $99.68 a barrel. February gold futures closed down $4.60 to $1606 an ounce.

-- Written by Chao Deng in New York.