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Stock market bounces back up

By ASSOCIATED PRESS
Published December 15, 2006

NEW YORK - Wall Street resumed its fourth-quarter rally Thursday, pushing the Dow Jones industrials to its first close above 12,400 after a series of strong company earnings and a drop in unemployment claims revived investors' confidence in the economy.

The market, which stalled earlier this week on interest rate and economic concerns, was reinvigorated by robust quarterly profits from Bear Stearns Cos., Lehman Brothers Holdings Inc. and Costco Wholesale Corp., as well as healthy outlooks from Citigroup Inc. and Honeywell International.

Wall Street was also boosted by the Labor Department's report that the number of Americans filing for unemployment benefits plunged for a second straight week. The data suggested the U.S. economy won't cool as quickly as some investors feared.

"As far as I can tell, consumers keep spending as long as unemployment is low," said Ed Peters, chief investment officer at PanAgora Asset Management Inc.

The Organization of Petroleum Exporting Countries said it is keeping its oil production target stable for now, but making cuts in February. Overall, the stock market was unfazed by the possibility of higher fuel prices dampening consumer spending and hiking companies' materials costs.

The Dow rose 99.26, or 0.81 percent, to a new closing record of 12,416.76, after hitting a new trading high of 12,431.26 earlier in the session. The Dow, which last hit a record close of 12,342.56 on Nov. 17, is up 16 percent this year.

Broader stock indicators also rose sharply. The Standard & Poor's 500 index climbed 12.28, or 0.87 percent, to a six-year record of 1,425.49, after reaching a six-year trading high of 1,427.23. The technology-laden Nasdaq composite index rose 21.44, or 0.88 percent, to 2,453.85.

Oil prices shot higher after the OPEC announcement. Crude oil for January soared $1.14 to settle at $62.51 a barrel on the New York Mercantile Exchange.

The stock market had been moving cautiously over the past week, inching up and then pulling back after the Federal Reserve left interest rates steady Tuesday and offered no hints that it might start lowering them. But Thursday's positive corporate and economic news sparked a resumption of stock buying, extending the Dow's upward climb.

"We're in that Santa Claus rally time, and there's nothing to stop it today," said Arthur Hogan, chief market analyst at Jefferies & Co.

Investors will be closely watching today's release of consumer price figures for November, which could provide clues to the Fed's plan for next year.

[Last modified December 14, 2006, 22:55:31]