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Date Posted: 13:41:00 12/16/02 Mon
U.S. stocks rally as investors look to next year
Reuters, 12.16.02, 3:28 PM ET
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(Updates to late afternoon)
By Herbert Lash
NEW YORK, Dec 16 (Reuters) - Stocks rallied on Monday as investors shrugged off lackluster consumer spending for the critical holiday shopping season and looked to 2003, snapping up beaten-down shares after two weeks of market declines.
The three major market gauges were on track to post their biggest single-day gains in almost three weeks, as year-end positioning by fund managers facing a third-straight year of a down market helped push stocks higher.
Investors looked past such worries as a possible U.S. war with Iraq to move funds from government bonds into stocks in a session with little economic news to drive stocks.
"There are a lot of short-term managers who are moving a few things before the year-end," said Brett Gallagher, deputy chief investment officer at Julius Baer. "It's being driven by some year-end positioning."
Retailers like Wal-Mart Stores Inc. (nyse: WMT - news - people) gained even in the face of lukewarm demand in the final shopping week before Christmas. Banking stocks snapped back from recent losses, pushing the Philadelphia Stock Exchange's Bank Index <.BKX> up 2.94 percent.
The Dow Jones industrial average <.DJI> was up 174 points, or 2.06 percent, at 8,608 in late afternoon trade. The broader Standard & Poor's 500 Index <.SPX> was up 19 points, or 2.13 percent, at 908.39. The technology-laced Nasdaq Composite Index <.IXIC> was up 33 points, or 2.4 percent, at 1,395.29.
Trading volumes were moderate, however, with the typically sluggish periods around the Christmas and New Year's holidays approaching. About 986 million shares traded on the New York Stock Exchange; 1.11 billion shares changed hands on Nasdaq.
LEHMAN BOOSTS U.S. ALLOCATION
A Lehman Brothers analyst's decision to raise the firm's exposure to U.S. equities in its model portfolio and cut its allocation to Europe, excluding the United Kingdom, helped underpin the rally, traders said.
All three key market gauges wrapped up a second straight week of losses last week in the wake of an eight-week autumn rally that pulled the S&P 500 and the Dow from five-year lows and the Nasdaq off of six-year lows hit in early October.
"Things are no longer overbought, and the market always seems to rally around the Christmas holiday," said Henry Herrmann, chief investment officer at Waddell & Reed. "So you're getting traders fooling around on the margin with a positive bent."
Shares of oil-related companies climbed in sync with crude oil prices, which jumped to more than $30 a barrel in New York as a strike crippling Venezuela's oil operations dragged into its third week. The American Stock Exchange's Oil Index <.XOI> jumped 1.9 percent. Shares of oil giant Exxon Mobil (nyse: XOM - news - people) rose 70 cents to $35.74.
Retailers were in focus after Wal-Mart Stores said its sales last week were at the low end of its expectations for December. Federated Department Stores (nyse: FD - news - people), parent of the Macy's and Bloomingdale's stores, said it expects holiday sales at stores open at least a year will be at the low end of its forecast range.
Wal-Mart's shares surged $1.42 to $51.96, and Federated rose 45 cents to $29.18.
Copyright 2002, Reuters News Service
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