Santa Claus Rally Continues as Dow Hits Two-Year Highs


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Wall Street slightly added to its Santa Claus Rally on Wednesday as rallying energy stocks and a weaker U.S. dollar lifted the Dow to new two-year highs.

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Today's Markets

The Dow Jones Industrial Average rose 9.84 points, or 0.09%, to 11585.38, the Standard & Poor's 500 gained 1.27 points, or 0.10%, to 1259.78 and the Nasdaq Composite added 4.05 points, or 0.15%, to 2666.93. The FOX 50 slipped 0.01 points, or less than 0.01%, to 899.30.

Wednesday's mini rally kept Wall Street's slow, upward December ascent in place, leaving the S&P 500 with its 17th gain in just 20 sessions.

“We’re on a nice glide path into the end of the year,” NYSE trader Keith Bliss of Cuttone & Co. told FOX Business. “Going into 2011, we’ll see a little bit of trade up into January. It wouldn’t be too unusual to see a nice little Santa Clause Rally continue.”

Without any major economic or earnings reports to use for direction, traders zeroed in on a favorite theme: weakness in the U.S. dollar. The rally picked up steam as the dollar slumped to session lows, spurring buying in energy stocks like Halliburton (NYSE:HAL) and materials stocks such as Rio Tinto (NYSE:RIO).

While the blue chips lost most of their early rally, they still managed to close at their highest level since August 2008. The majority of the Dow's 30 stocks gained ground, led by McDonald's (NYSE:MCD) and Walt Disney (NYSE:DIS). The index's weakest links were Alcoa (NYSE:AA) and JPMorgan Chase (NYSE:JPM).

The Nasdaq Composite landed near levels unseen since October 2007 and was led higher by tech stocks like Yahoo! NASDAQ:YHOO) and (NASDAQ:AMZN).

As has been the case all week, trading volume remained at anemic levels due to the blizzard that slammed the East Coast and many people using vacation time before the end of the year. Underscoring just how quiet it has been on Wall Street, the New York Stock Exchange on Monday posted its lowest full-day trading volume of the year and the Dow has moved in a range of less than 100 points for 18-straight days.

Wall Street hit session highs earlier in the day as the euro extended its gains against the greenback. The euro was up 0.84% to $1.3227 as U.S. markets closed. The euro buying gained momentum after a strong 7-year auction of Treasurys. A weaker dollar tends to boost equities and commodities because it makes exports cheaper.

Energy stocks were the biggest beneficiaries of the currency action, rallying more than 1% as a sector. Individual stocks like Schlumberger (NYSE:SLB) and Valero (NYSE:VLO) posted even more impressive gains.

On the commodity front, crude oil fell 37 cents, or 0.40%, a barrel to $91.12. Gold rose $7.90 a troy ounce, or 0.56%, to $1,413.10.

Retailers like Macy's (NYSE:M) and Abercrombie & Fitch (NYSE:ANF) also provided Wall Street with strength, shrugging off the effects of the blizzard. ShopperTrak estimated the storm postponed $1 billion in retail sales and caused total U.S. foot traffic to be 11.2% below expectations. However, that wasn't enough to derail ShopperTrak's prediction for a 4% rise in holiday-shopping sales.

Corporate Movers

BJ's Wholesale Club (NYSE:BJ) soared 7% as the New York Post reported private equity firm Leonard Green & Partners "remains keen" to acquire the warehouser. Leonard Green could launch a hostile takeover bid if an auction isn't on the horizon, the paper reported.

Sara Lee (NYSE:SLE) unloaded its White King and Janola cleaning products unit to Asutralia's Symex Holdings for 37.9 million euros. The business makes and sells bleach, toilet, laundry and other cleaning products. The transaction is expected to close in the first quarter.

Global Markets

The U.K.'s FTSE 100 fell 0.21% to 5996.36, Germany's DAX advanced 0.34% to 6995.47 and France's CAC 40 jumped 0.83% to 3890.65.

Japan's Nikkei 225 climbed 0.50% to 10344.50, Hong Kong's Hang Seng rallied 1.54% to 22969.30 and China's Shanghai Composite added 0.68% to 2751.53.