U.S. stocks had their biggest weekly rally since June after President Barack Obama expressed confidence on a budget agreement with Congress and data from China to Germany bolstered optimism about global growth.
In a Tuesday, July 10, 2012, file photo, traders work at the start of early trading at the New York stock Exchange. U.S. stocks slid for a sixth day Thursday, July 12, 2012, as concern spread that weaker global economic growth and the European debt crisis will hurt U.S. corporate earnings. (Bebeto Matthews /AP Photo)
All 10 groups except for utilities in the Standard & Poor's 500 Index rose during the Thanksgiving-shortened week. An index of homebuilders climbed 5.4 percent amid better-than-estimated housing data. Bank of America Corp. (BAC) jumped 8.6 percent after an analyst said the lender may commit as much as $10 billion to dividends and share repurchases in 2013. Salesforce.com Inc. (CRM) surged 11 percent after revenue beat estimates. Apple Inc. (AAPL) gained 8.3 percent, ending a streak of eight weekly losses.
The S&P 500 advanced 3.6 percent to 1,409.15 for the week, extending its 2012 gain to 12 percent. The Dow Jones Industrial Average rallied 421.37 points, or 3.4 percent, to 13,009.68. Both gauges had the best week since June 8.
"What you're seeing out of Washington before the break is a very cooperative tone," Bill Greiner, who oversees $14 billion as chief investment officer at Mariner Wealth Advisors in Kansas City, Missouri, said in a phone interview. "There is a gathering sense that the deceleration in economic growth in China seems to be bottoming right now. Both of those areas are adding to a little bit strength in the market."
The S&P 500 began the week with the biggest advance in two months after Obama met with senior Democrats and Republicans on Nov. 16 for talks to avoid a so-called fiscal cliff of $607 billion in automatic tax increases and spending cuts next year. The index continued to climb after Israel and the Palestinian militant group Hamas agreed to call a halt to more than a week of air strikes and missile attacks. Data showed the first expansion in China's manufacturing industry in 13 months and an unexpected gain in German business confidence.
The S&P 500 rallied 1.3 percent on the last day of the week, posting the best post-Thanksgiving performance since 2007, as the American holiday shopping season began. The index has gained an average 0.6 percent during the week of Thanksgiving, according to data since World War II compiled by Bloomberg. That compares with 0.15 percent in all calendar weeks in the same time frame.
Concern that Obama's re-election set up a budget showdown with the Republican-controlled House of Representatives sent the S&P 500 down 7.7 percent from its 2012 high in September through Nov. 15. Federal Reserve Chairman Ben S. Bernanke said on Nov. 20 that the central bank doesn't have the tools to offset the potential harm to the economy from the fiscal cliff.
Source: Bloomberg | Lu Wang