Wall Street Ends on a High Note

Stocks on Wall Street rally to close the penultimate day of 2008 trading with solid gains despite the release of dismal economic data. Frank Curzio reviews the action in The Real Story (above).
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Updated from 4:04 p.m. EST

Stocks in New York finished on a high note Tuesday after investors shrugged off the release of the worst consumer confidence figures on record and prepared to close the book on a year that broke banks and portfolios alike.

The

Dow Jones Industrial Average

gained 184.46 points, or 2.2%, to 8668.39, and the

S&P 500

tacked on 21.22, or 2.4%, to 890.64. The

Nasdaq

climbed 40.38 points, or 2.7%, to 1550.70.

Wall Street and Main Street are no doubt relieved to bid adieu to a traumatic 2008. Putting a final stamp on the down year, the Conference board reported Tuesday that

consumer confidence

fell to a new all-time low in December, to 38 from 44.7 in November. "The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008," says Lynn Franco, director of the Conference Board Consumer Research Center.

The data didn't get any better, but investors didn't expect them to, says Alan Gayle, senior investment strategist at RidgeWorth Capital Management. "We've had a significant selloff; there are a lot of battered investors lying in the streets, and we're seeing some last-minute repositioning as we finish up the year."

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The last five trading days of the year and the first five trading days of the new year typically have a positive tilt, and the market appears to be focusing more on the fall back in energy prices and year-end positioning than incremental news, says Gayle.

While the term "Santa Claus rally" might come to mind, Gayle says what we're seeing now might be

Santa Claus Lite

. "As far as Wall Street is concerned, holiday cheer is more of a theoretical concept this year -- none of it has come off of the greeting card, but we're finishing in typical form."

Adding juice to the market, the Treasury Department said it will provide $5 billion to

GMAC Financial Services

, GM's auto and mortgage financing arm, to keep it from filing for Chapter 11. In return for the capital infusion, the government will receive preferred shares that pay an 8% dividend and warrants to purchase additional shares.

As part of the GMAC package, the Treasury will also extend up to $1 billion to GM, enabling the company to purchase additional equity as GMAC strives to raise more capital. Shares of GM added 5.6% to $3.80, and fellow American automaker

Ford

(F) - Get Report

nudged up 3.2% to $2.29.

Fallout from a lackluster holiday sales season continues to play out in the retail sector. The International Council of Shopping Centers said Tuesday that in the week ended Dec. 27, chain store sales fell 1.5% compared to a 2.6% gain the week prior. Meanwhile,

Parent Co.

(KIDS) - Get Report

, which operates etoys.com, is the latest victim to fall, filing for Chapter 11 bankruptcy protection this week. Shares of Parent Co. gave up a penny, dwindling to a mere 6 cents.

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The Conference Board said the so-called Present Situation index fell to 29.4 from 42.3 a month prior, and the Expectations Index decreased to 43.8 from 46.2 in November. "Both sub-indexes bear careful watching over the next several months to see if they are starting to show signs of approaching a bottom," says Franco. "In the meantime, however, the overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half."

The

Standard & Poor's/Case-Shiller

20-city housing index fell by a record 18% in October year over year, while the 10-city index fell 19.1%. The 20-city drop was the largest since its inception in 2000.

In commodities, gold fell $5.30 to settle at $870 an ounce. Oil fell 99 cents to settle at $39.03, after rising above

$40 a barrel

a day prior on the possibility that Israeli attacks in Gaza could lead to restrictions in regional supply.

Longer-dated U.S. Treasury securities were picking up ground. The 10-year note was gaining 5.5/32 to yield 2.1%, and the 30-year was rising 1 20/32, yielding 2.6%. The dollar was weaker against the euro, and stronger against the pound and yen.

Overseas, European exchanges such as the FTSE in London and the DAX in Frankfurt were registering slight gains. In Asia, Japan's Nikkei ended higher while and Hong Kong's Hang Seng nudged lower.

Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP contributed to this report.