US stocks: Market rides Santa rally higher for third day

NEW YORK - US stocks closed slightly higher on Thursday as the "Santa Claus" rally kept going for a third straight day.

The economic news was mixed and trading was light as Wall Street headed home early for the Christmas holiday.

Masonite International, which has agreed to a US$2.5 billion takeover offer from US buyout firm KKR, saw its shares jump 17 per cent to US$33.36 after analysts said the company may draw competing bidders and a sweetened offer.

But shares of American Greetings Corp. fell 13 per cent to US$24.25 after reporting that weak sales in its retail and seasonal gift wrap business dragged down quarterly profit from operations.

The Dow Jones industrial average added 11.23 points, or 0.10 per cent, to close at 10,827.12. The Standard & Poor's 500 Index was up just 0.56 of a point, or 0.08 per cent, to end at 1,210.13. The technology-laced Nasdaq Composite Index gained 3.59 points, or 0.17 per cent, to finish at 2,160.62.

The stock market extended its "Santa Claus" rally, with both the Dow and the S&P 500 hitting fresh 3 1/2-year highs for the third consecutive session. Wall Street calls it a "Santa Claus" rally when US stocks typically move higher during the last five sessions of the year and the first two in January.

"It was typical holiday type trading," said Robert Basel, managing director of Citigroup Global Markets. "There just weren't a lot of people around."

Over the last few days, the market has seen money being put to work from the sidelines, which has helped fuel the year-end rally, Basel said.

Trading was light, with almost 1 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.4 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.

Advancing shares led declining shares by a margin of 9 to 7 on the Big Board, while advancers led decliners by a similar margin on the Nasdaq.

The stock market is closed on Friday for the Christmas holiday, which left many trading desks thinly staffed on Thursday.

For the week, the Dow rose 1.66 per cent, the Nasdaq advanced 1.19 per cent, and the S&P 500 gained 1.33 per cent.

The market's move higher on Thursday came as economic data offered a mixed picture.

A Commerce Department report showed US durable goods orders jumped 1.6 per cent in November, pointing to a healthy pace of activity in the factory sector

The University of Michigan's final reading of its December index of consumer sentiment rose to a higher-than-expected 97.1.

But consumer spending edged up a slim 0.2 per cent in November, as purchases of new cars dropped sharply, a government report said.

"What you have is kind of a mixed bag," said Phil Flynn, senior market analyst at Alaron Trading Corp. "Obviously, the durable goods number is extremely encouraging because that rise blew away market expectations.

The small gain in consumer spending, however, was cause for concern because it's a sign that "consumers may be tightening up their wallets in the heat of the all-important holiday shopping season," Flynn said.

In other economic news, initial claims for US jobless benefits rose to 333,000 last week -- exceeding Wall Street economists' forecast for 330,000 claims.

Meanwhile, November sales of new US homes tumbled 12 per cent, the sharpest rate in more than a decade.

Masonite shares surged 16.7 per cent, or US$4.78, to US$33.36 on speculation of a sweetened bid, while shares of accounting and business services firm Resources Connection Inc. jumped 14 per cent, or US$6.50, to US$53.10 after the company said quarterly earnings more than tripled.

Shares of General Motors Corp. fell 0.77 per cent, or 31 cents, to US$39.83 after US safety regulators said the company will recall 717,302 minivans because passengers could hurt their arms or wrists when opening a power sliding door. Reuters

- REUTERS