Wall Street Stages 'Santa Claus Rally', Nasdaq Crosses 2,000
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Monday, December 29, 2003
NEW YORK — Stocks jumped Monday as investors bet on a prosperous 2004, pushing all three major market gauges to their highest closing levels of 2003 and sending the Nasdaq composite to close over the 2,000-point mark for the first time in nearly two years.
The Nasdaq Composite Index (search) rose 33.34 points, or 1.7 percent, to finish at 2,006.48, following a 1.1 percent advance last week. The tech-dominated index had not closed above the 2,000 mark since Jan. 15, 2002. The Dow Jones industrial average (search) closed up 125.33 points, or 1.20 percent, at 10,450.00. The broader Standard & Poor's 500 Index (search) ended up 13.58 points, or 1.24 percent, at 1,109.47.
The market also got a lift from early indications that the holiday shopping season had gone well, and portfolio managers may be looking for more positive news in January -- typically a good month for the markets.
"Even with a heightened terror alert, the onset of mad cow for the first time in the U.S., throughout all of that, the market has continued to move higher," said Brian Bush, director of equity research at Stephens Inc. "If you're a portfolio manager, you've had a great year, the first up year in three, and the outlook for '04 looks good ... you're probably looking to make some bets going into the new year."
Wall Street historically has a modest rally in the last five trading days of the year and the first two in January. The so-called "Santa Claus rally" has gained an average of 1.5 percent since 1950, according to the Stock Trader's Almanac.
In addition, January is among the strongest months of the year for the Standard & Poor's 500, averaging a 1.5 percent gain since 1950, according to the almanac.
"This is a seasonally strong time of the year," said Brian Pears, head of equity trading at Victory Capital Management, adding that portfolio managers are anxious to show they are fully participating in the strong upward trend stocks have experienced going into the year's end.
Investors tend to put money to work ahead of such a period, when funds often flow into the market through 401(k) and pension plans, said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Banking.
"People know that this time of the year is when you want to position your portfolios to take advantage of all the cash that typically comes in at the beginning of the year," Fitzpatrick said.
So far this December, the Dow is up 6.8 percent, the S&P 500 is up 4.9 percent, and the Nasdaq Composite is up 2.4 percent. Year-to-date, the Dow is up 25.3 percent, the S&P 500 is up 26.1 percent and the Nasdaq Composite is up 50.2 percent, putting all three on track to post their first annual gains since 1999.
Meanwhile, the dollar fell to an all-time low against the euro. The 12-nation European currency moved above $1.25 for the first time Monday, climbing to a peak of $1.2511 before slipping back under the $1.25 mark. The dollar has fallen 19 percent against the euro this year.
Some food company and restaurant stocks extended their recovery from losses suffered last week following the announcement of the first case of mad cow disease in the United States. It appeared that long-term consumer reaction to the news would be muted.
McDonald's Corp. (MCD), the No. 1 hamburger chain, advanced 51 cents, or 2 percent, to $24.60 and was among the most active on the New York Stock Exchange. Investment house JP Morgan raised its rating on the Dow component to "overweight" from "underweight."
Among other beef-related shares, Smithfield Foods Inc. (SFD) , the nation's largest pork producer and a major beef processor, skidded 85 cents, or 4 percent, to $21.06. Hormel Foods (HRL) , the maker of Spam luncheon meat and Dinty Moore beef stew, slumped 58 cents, or 2 percent, to $25.57. CSFB downgraded the two companies to neutral from outperform.
Also Monday, the New York Stock Exchange announced it would take steps to delist Footstar Inc. (FTS), in view of the overall uncertainty surrounding the company's restatement of earnings through 2002 and continued delays in the completion of its financial statements.
Trinity Biotech plc (TRIB) surged $1.86, or 57 percent, to $5.14 and ranked among the most actively traded on the Nasdaq. The company said it received U.S. regulatory approval to market its HIV test in the United States.
Nanogen Inc. (NGEN). which develops diagnostic instruments for genetic testing, surged $1.55, or 21 percent, to $9.05 after Zacks Investment Research on Friday made upbeat comments on the market for molecular-testing products.
The Russell 2000 index, which tracks the performance of smaller companies, closed up 8.98, or 1.6 percent, at 563.88.
Overseas, Japan's Nikkei stock average rose 0.8 percent. In Europe, Britain's FTSE 100 gained 0.3 percent, Germany's DAX index was up 1.3 percent and France's CAC-40 rose 0.3 percent.
Reuters and the Associated Press contributed to this report |
