A preholiday rally

[notiCIas]

A preholiday rally

S&P 500 and Nasdaq manage to carve out fresh 4-1/2 year high ahead of Thanksgiving.

November 23, 2005: 6:25 PM EST
By Alexandra Twin, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) - Stocks gained Wednesday, with the Nasdaq and S&P 500 carving out fresh four-and-a-half-year highs in an upbeat session ahead of the Thanksgiving holiday.

The Dow Jones industrial average (up 44.66 to 10,916.09, Charts) added around 0.4 percent. A bigger advance earlier in the session had set the Dow at a four-and-a-year high.

The broader S&P 500 (up 4.38 to 1,265.61, Charts) index added just under 0.4 percent, while the Nasdaq composite (up 6.42 to 2,259.98, Charts) added 0.3 percent. Both major gauges closed at fresh four-and-a-year highs.

Treasury prices tumbled, sending the corresponding yields higher, and the dollar gained versus the euro and slid versus the yen.

All three gauges had swayed on both sides of breakeven in the morning, before finding momentum near midday.

Financial markets are closed Thursday, and both the stock and bond markets close early Friday. The bond market closed early Wednesday as well.

Trading volume Friday will likely be light, with many Wall Street professionals opting to take a four-day weekend. Yet, the day is of great significance to the retail sector, and by extension, the broader market, as Wall Streeters look to gauge the strength of Black Friday, which marks the start of the holiday shopping period.

U.S. light crude oil for January delivery fell 13 cents to settle at $58.71 a barrel on the New York Mercantile Exchange after the weekly oil inventory report showed a bigger-than-expected rise in distillates, which are used in heating oil.

In addition, the University of Michigan's consumer sentiment index for November rose more than expected, recovering after a two-month slip.

"You have the correct sectors continuing to lead, which are technology and financials. The Michigan numbers were good today, and oil prices are down," said Barry Hyman, equity strategist at Ehrenkrantz King Nussbaum.

In a broader sense, "the market is strong and getting stronger," Hyman added. "I'm looking for a rally to last until the first or second week of December before it dries up."

Stocks gained Tuesday after the release of the minutes from the November Federal Reserve policy meeting, which suggested the central bank may be nearing the end of its almost 17-month rate hiking campaign.

That optimism continued to support sentiment Wednesday. However, the market advance seems to have taken on a life of its own, having stretched for nearly five weeks now.

Even after such a big run-up, market analysts say that the stock advance could continue through December. (Full Story)

On the move
Twenty-three of the 30 Dow issues advanced, with McDonald's (up $0.72 to $33.71, Research), Intel (up $0.48 to $26.64, Research), Pfizer (up $0.26 to $21.64, Research) and J.P. Morgan (up $0.58 to $38.78, Research) and American Express (up $0.65 to $52.40, Research) the biggest gainers.

A variety of financial stocks gained, boosting the Amex Securities Broker/Dealer (Charts) index by 1 percent.

Steel stocks jumped after Luxembourg-based steel producer Arcelor made a $3.75 billion hostile takeover bid for Canada's Dofasco.

That gave a boost to U.S. Steel (up $1.00 to $40.77, Research) and AK Steel Holding Corp. (up $0.58 to $8.03, Research), among others.

Telecom and networking shares were higher, including Ciena (up $0.08 to $2.80, Research), Motorola (up $0.62 to $24.62, Research) and Lucent Technologies (up $0.07 to $2.97, Research).

On the downside, shares of Research in Motion (down $0.80 to $66.28, Research) slipped after the maker of the BlackBerry wireless device cut its subscriber outlook for the rest of the fiscal year.

Alexion Pharmaceuticals (down $8.03 to $21.53, Research) slumped 27 percent in active Nasdaq trading after saying that a late-stage trial of its heart drug failed to cut heart attacks by a significant amount.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by more than nine to seven as 1.45 billion shares changed hands. On the Nasdaq, advancers barely topped decliners on volume of 1.62 billion shares.

Treasury prices slumped in a shortened pre-holiday session. The selloff raised the yield on the 10-year note to about 4.48 percent from 4.42 percent late Tuesday. Treasury prices and yields move in opposite directions.

The dollar was little changed versus the euro and slipped versus the yen.

COMEX gold fell 60 cents to $492.30 an ounce.