US stocks rose, driving the Standard & Poor's 500 Index to its second straight winning week, as better-than-expected reports on consumer confidence and unemployment shored up optimism the economy is recovering.
American Express Co and other credit card companies rallied on expectations more free-spending shoppers will keep racking up debt. AOL Time Warner Inc advanced after the biggest Internet provider said it added 1 million new users in the past month.
"There are all sorts of very optimistic forecasts for huge earnings recoveries next year and you have the idea that you don't want to be left behind," said Donald Coxe, chairman and chief strategist for Chicago-based Harris Investment Management, which oversees US$17 billion.
The S&P 500 rose 3.89, or 0.3 percent, to 1,161.02. The NASDAQ Composite Index climbed 10.85, or 0.6 percent, to 1,987.27. The Dow Jones Industrial Average gained 5.68, or 0.1 percent, to 10,136.99.
Just 894 million shares traded on the New York Stock Exchange, down 30 percent from the three-month average as many traders and investors took off Christmas week. It marked the first time since August that less than 1 billion shares traded on three consecutive days. Almost two stocks rose for every one that fell on the Big Board.
The Dow climbed 1 percent this week. The average, which had sunk as much as 24 percent for the year following the Sept. 11 terrorist attacks, has cut its loss for the year to 6 percent.
The S&P 500 gained 1.4 percent this week and is down 12 percent this year. The NASDAQ rallied 2.1 percent the past five days and is down 20 percent this year. That has brought its decline the past two years to 50 percent.
Earnings for companies in the S&P 500 have dropped every quarter this year and are expected to fall in the first three months of next year before rising 8.8 percent in the second quarter, according to Thomson Financial/First Call.
Stocks rallied in the past three months in anticipation of improved earnings. Still, the gains may be overdone considering expectations for two more quarters of declining profits, some investors said. While a "huge rebound in profits next year is a more probable concept than the tooth fairy, I am not sure how much more probable it is," Coxe said.
Stocks rose today as consumer confidence surged this month, the first increase since June, according to a survey suggesting Americans feel the worst of the recession is over. The Conference Board's index had its largest gain since February 1998.
A government report showed jobless claims rose less than expected last week, a sign the biggest employment losses related to the terrorist attacks may be over.
"Some economic recovery is on the horizon and that should continue to be good for stocks," said James Luke, manager of the US$200 million BB&T Asset Management Large Company Growth Fund in Raleigh, North Carolina. Luke has been adding to holdings of Dell Computer Corp, EMC Corp and ChevronTexaco Corp. The fund has lost 22 percent this year.
American Express, the charge-card company and biggest travel agency, added US$1.05 to US$36.05 after the economic reports underscored confidence the recession hasn't deterred individuals from spending as much as expected.
AOL Time Warner added the most to the S&P 500. The biggest media and Internet company advanced US$0.67 to US$33.10, paring its loss for the year to 4.9 percent. The company added 1 million subscribers in about four weeks to its America Online Internet service, raising the total to more than 33 million.
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