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U.S. Stocks Trade Higher
From the Wall Street Journal of Fri, 26 Dec 2014 11:26:52 EST

U.S. stocks gained Friday, putting major benchmarks on track for new all-time highs.

The Dow Jones Industrial Average advanced 46 points, or 0.3%, to 18076, after reaching an intraday high in morning trading. The S&P 500 gained nine points, or 0.4%, to 2090, also hitting an intraday record.

The Nasdaq Composite Index rose 26 points, or 0.6%, to 4800.

Trading is expected to be quiet. U.S. markets were closed Thursday for the Christmas holiday, and most European markets remained closed Friday.

“People have already positioned themselves for year-end,” said Chris Gaffney, senior market strategist at EverBank Wealth Management. “I don’t think they are going to take risks by coming in and putting on big [bets] for next year.”

U.S. stocks have advanced to record highs this week, after data showed the U.S. economy expanded at a 5% seasonally adjusted annual rate in the third quarter, marking its strongest growth in more than a decade. Before Friday, the Dow had rallied 5.6% in six sessions and climbed above 18,000 for the first time on Tuesday. The advance started last Wednesday, when Federal Reserve officials indicated that they would be “patient” about raising interest rates, a move widely expected next year.

“Economic news has been pretty strong,” said Stephen Freedman, a strategist with UBS Wealth Management. “All of that is helping the market… it does speak to a more steady trajectory of [earnings] growth.”

UBS is recommending its clients favor stocks over bonds and keep more of their portfolio in U.S. stocks than they normally would. The bank is also recommending its clients take a bullish view on small-cap U.S. stocks, which have fallen behind larger stocks this year, since they are more closely tied to U.S. growth.

Investors are watching for results from the holiday-shopping season, since a monthslong drop in oil prices is expected to continue to boost consumer spending. The National Retail Federation forecasts a 4.1% increase in sales in November and December, the biggest rise since 2011.

“Low oil prices will continue to be a positive for the U.S. consumer, which should ultimately help drive the recovery in the U.S. economy,” said Mr. Freedman.

A gain of 0.6% in the SPDR S&P retail exchange-traded fund, which tracks shares of retailers, outpaced the rise in the broader market Friday.

Crude-oil prices slipped 0.4% to $55.58 a barrel. While oil prices have slumped nearly 50% since June, the slide has been less severe since mid-December. Oil prices have slipped 1.2% this week, slowing from last week’s 2.2% decline and the 12% dive the week before. The relative stability has helped support the latest rebound in stock prices, investors say.

The oil-price drop roiled global markets earlier this month as investors worried it could cause trouble in other investments. Trading was especially bumpy in emerging markets, as currencies of oil-exporting countries like Russia tumbled, and in high-yield bonds, as fears spread about potential defaults of small, indebted energy companies.

U.S. stock futures rose Friday, putting the Dow industrials on early track for a seventh straight session of gains. WSJ's John Shipman and Simon Constable discuss. Photo: Getty

Strategists expected strong gains in U.S. stocks in December, even after the stock market’s decline in the first half of the month. The S&P 500 fully recovered from its 4.6% drop earlier this month and pushed to its 51st record high on Tuesday. Historically, December boasts the best long-term average stock-market performance of all the calendar months.

Treasury prices rose Friday, sending the yield on the 10-year note down to 2.261%. Utilities stocks, which some see as a proxy for the bond market, gained alongside U.S. government bonds, rallying 1.3%.

Gold prices gained 1.7% to $1193.40 an ounce.

In Asia, the Shanghai Composite rallied 2.8% in a continuation of recent volatile trading in the region. The gains were led by financial stocks, which jumped on news that China is easing rules on lending

In corporate news, Inc. gained 1.1% after the online retailer said holiday sales made from its smartphone app doubled this year, and that nearly 60% of its customers shopped on a mobile device.

Write to Alexandra Scaggs at

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