Wed, December 22, 2010
Business > Markets

US stocks edge higher as financials gain

2010-12-22 15:25:37 GMT2010-12-22 23:25:37 (Beijing Time)

NEW YORK – Stocks edged higher on Wednesday as financial stocks helped extend four days of gains that drove the S&P 500 to levels not seen since before Lehman Brothers went bankrupt two years ago.

Financial stocks, which have helped drive the recent rally after lagging through the autumn, were stronger. Bank of American Corp (BAC.N) rose 2.1 percent to $13.27, while JP Morgan Chase & Co (JPM.N) climbed 2.1 percent to $41.85.

The KBW regional bank index (.KRX) rose nearly 3 percent and is now up almost 18 percent for the month. Within that, Provident Financial Services Inc (PFS.N) climbed 1.3 percent to $15.45.

Despite technical indicators pointing to an overbought market after the S&P 500 has climbed over 6 percent this month, interest from institutional investors could sustain a thinly traded market through the holiday period.

"They're just trying to close out the year well," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "A lot of the bearish patterns or indicators over the last few weeks have failed, and a failed bearish setup is very bullish."

The Dow Jones industrial average (.DJI) gained 6.05 points, or 0.05 percent, to 11,539.21. The Standard & Poor's 500 Index (.SPX) rose 2.35 points, or 0.19 percent, to 1,256.95. The Nasdaq Composite Index (.IXIC) added 2.83 points, or 0.11 percent, to 2,670.44.

The S&P 500 is above 1,255.08, a level last seen in September 2008, before Lehman collapsed and an important psychological barrier for investors.

Energy shares rose as crude oil futures topped $90 a barrel. Chevron Corp (CVX.N) added 0.3 percent to $89.49, while Exxon Mobil Corp (XOM.N) climbed 0.2 percent to $72.89.

High levels of bullishness and the S&P 500 relative strength index (RSI) are among indicators pointing to an overbought condition but that may only be worked off before traders return from the holidays in January.

The latest Investors Intelligence sentiment survey, which monitors comments from investment advisers, showed bulls rose to 58.8 percent last week, the highest point since 2007. Only 20.5 percent of investors are bearish, according to the survey.

In corporate news, Nike Inc (NKE.N) posted future orders that missed expectations on Tuesday, sending shares of the world's largest athletic shoe and clothing maker down 5.8 percent to $86.90.

Walgreen Co (WAG.N) posted higher profit on increased prescription sales and a slower pace of store openings that helped control costs, sending its shares up 7.8 percent to $39.65.

Geopolitics is a wild card. South Korea announced military exercises, including its largest-ever live-fire drill near North Korea just as tensions on the peninsula were beginning to ease after Pyongyang's attack on a southern island.

U.S. economic growth was a touch stronger than previously estimated in the third quarter, but consumer spending was softer.


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