Stocks Coasting Into the New Year

Financial stocks led a modest rally yesterday that took the broad markets to new highs. And even though the sector had some of its gains shaved late in the day, its influence led the S&P 500 higher for the 13th time in 15 sessions, making this December “Santa Claus rally” one of the most impressive in recent memory.

In corporate news, the surge of bank stocks came following the purchase of Chrysler Financial by Toronto-Dominion Bank (NYSE: TD). Last week, the Bank of Montreal (NYSE: BMO) agreed to buy another U.S. bank for $4.1 billion, and Berkshire Hills Bancorp, Inc. (NASDAQ: BHLB) agreed to buy Legacy Bancorp Inc. (NASDAQ: LEGC). Regional banks reacted with First Horizon National Corporation (NYSE: FHN) jumping 4.2%, SunTrust Banks, Inc. (NYSE: STI) up 3.6%, Fifth Third Bancorp (NASDAQ: FITB) up 2.9%, and BB&T Corporation (NYSE: BBT) gaining 1.18%. 

In other news, Walgreen Company (NYSE: WAG) rose 5.48% on better-than-expected earnings, which helped it reach a new 52-week high.

In economic news, Gross Domestic Product (GDP), the value of all goods and services produced in the United States, rose at a seasonally and inflation-adjusted annual rate of 2.6% in July through September. Most economists had been predicting a rise of 2.9%, but the difference appeared to have little impact on stocks. And the price of existing homes rose by 5.6% for the first increase since August.

The 10-year Treasury note fell following the last bond purchase of the week to yield 3.346% versus 3.3322% on Tuesday. The euro traded at $1.3094, down from $1.3096 on Tuesday.

At the close, the Dow Jones Industrial Average rose 26 points to 11,559, the S&P 500 gained 4 points at 1,259, and the Nasdaq gained 4 points to 2,671. Volume on the NYSE increased to 1.2 billion shares with advancers ahead of decliners by 1.6-to-1. The Nasdaq crossed 379 million shares with advancers ahead by 1.2-to-1.

Crude oil for February delivery rose 66 cents to $90.48 a barrel due to rising demand in the United States and China. The Energy Select Sector SPDR (NYSE: XLE) gained 23 cents at $67.22. February gold fell $1.40 to $1,387.40 an ounce, and the PHLX Gold/Silver Sector Index (NASDAQ: XAU) lost 1.65 points, closing at $219.15.