US stocks end firmer

US stocks rose in a holiday-shortened session on Wednesday after a barrage of economic data signalled the economy was weak, but not as bad as feared, while the fall in crude oil prices and bargain hunting helped retail and airline stocks. The Dow snapped a five-day losing streak, while the S&P 500 and the Nasdaq reversed two days of declines.
Extremely low volume - the lightest since December 26, 2003 - helped enhance the market's gains in the abbreviated Christmas Eve session. Among the stocks helped by cheaper oil prices were US Airways and Target Corp. The airline index was up 2 percent, while the S&P 500 index of retail stocks also rose about 1 percent.
A government report showed US consumers cut spending for the fifth straight month in November, while incomes shrank, suggesting intensifying recessionary pressures. Still, the data was not as bad as feared, sparking a glimmer of hope that the economy had seen its worst. Data that showed US mortgage rates fell to the lowest level in 37 years and applications for mortgage loans hit a five-year high also offered some reason for optimism.
"The expectation is that we are in the worst of what we're going to see in terms of GDP growth and earnings growth," said Scott Wren, senior equity strategist at Wachovia Securities, in St. Louis. "All the things the Fed is doing and the Obama administration is going to do are going to be good, and people are starting to look at that."
The Dow Jones industrial average rose 48.99 points, or 0.58 percent, to end at 8,468.48. The Standard & Poor's 500 Index added 4.99 points, or 0.58 percent, to 868.15. The Nasdaq Composite Index climbed 3.36 points, or 0.22 percent, to close at 1,524.90.
Trading ended at 1800 GMT on Wednesday in observance of Christmas Eve. US markets will be closed on Thursday for Christmas Day. Trading will resume on Friday.
Bargain hunting helped drive the S&P index of financial stocks up 1.9 percent. Bank of America shares surged 6.1 percent to $13.53 and ranked as the top-weighted advancer in the Dow industrials. The stock of rival bank holding company J.P. Morgan Chase & Co shot up 2.5 percent to $29.85 and also helped lift the Dow.
Among the day's more encouraging economic headlines, the Commerce Department reported that consumer spending fell 0.6 percent, which was not as bad as the 0.7 percent drop expected by economists polled by Reuters. Personal incomes slipped 0.2 percent, which economists had forecast as flat.
Durable goods orders, which are orders for long-lasting manufactured goods such as washing machines and refrigerators, fell 1 percent in November - less than the decline of 3 percent forecast in a Reuters poll. Data from Freddie Mac, one of the largest US home funding companies, showed the average interest rate on a US 30-year fixed-rate mortgage had slid to 5.14 percent in the week ending December 24 - the lowest in 37 years.
Veteran banking analyst Richard Bove of Ladenburg Thalmann said housing prices are expected to stabilise and possibly rise after a likely boom in mortgage refinance, spurred by the fall in mortgage rates. After the US stock market's early close on Christmas Eve, there will be just four trading days left in the year.
The broad S&P 500 is down about 41 percent for the year. That decline for the year is surpassed only by the drop of 47.1 percent during the Great Depression. Among the gloomy news this morning, a Labour Department report measuring initial applications for unemployment benefits showed a 30,000 jump last week to a 26-year high of 586,000 versus the 556,000 in the previous week.
On the New York Stock Exchange, only 403.7 million shares changed hands - far below last year's estimated daily average of 1.90 billion. On the Nasdaq, only about 516.7 million shares traded, also well below last year's daily average of 2.17 billion. Advancers outnumbered decliners on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, about seven stocks rose for every six that fell.