Santa Claus rally hits ‘Star Wars’-studded Wall St.
NEW YORK (AP) — Stocks pushed higher for a third straight day after a surprisingly strong report on housing provided the latest evidence that the economy is picking up speed.
All major indexes gained less than 1 percent Tuesday, with the Standard & Poor’s 500 index and the Nasdaq composite index closing at new highs for the year. The Dow Jones industrial average rose 50 points, bringing its three-day point gain to 156.
Stocks got off to a positive start after a report from the National Association of Realtors said home resales jumped 7.4 percent in November. That was much more than the 2.5 percent increase analysts expected. The government’s tax breaks have spurred sales to their highest level in nearly three years.
The report added to a recent string of encouraging news on the economy, including upbeat earnings and forecasts from technology companies and more corporate dealmaking.
“It’s just another rung in the recovery ladder,” said Brett D’Arcy, chief investment officer at CBIZ Wealth Management Group.
There were other signs that investors were feeling more confident. Bond prices fell further, pushing yields sharply higher. The gap between yields on short- and long-term bonds has widened to record levels, indicating that investors see the economy growing.
Meanwhile, the dollar rose against the euro as investors bet that the U.S. will recover quicker than economies in Europe. And a gauge of the market’s volatility dropped to its lowest point since May 2008. The Chicago Board Options Exchange’s Volatility Index, known as the market’s fear index, fell 4.6 percent to 19.55, after earlier falling as low as 16.26. It hit a record 89.5 last October during the height of the financial crisis.
D’Arcy said he expects the positive outlook on the economy to build on itself and to continue to propel the market forward through the end of the year.
According to preliminary calculations, the Dow Jones industrial average rose 50.79, or 0.5 percent, to 10,464.93. The Standard & Poor’s 500 index rose 3.97, or 0.4 percent, to 1,118.02, while the Nasdaq composite index rose 15.01, or 0.7 percent, to 2,252.67. Both the S&P 500 and the Nasdaq are at their highest levels since last October.
Wall Street typically does well in late December. Since 1950, the average return for the Dow during the week leading up to Christmas was 0.7 percent, according to Schaeffer’s Investment Research. And the week following Christmas, the average return was 0.8 percent. The year-end advance is commonly known as a Santa Claus rally.