Dec. 23, 2011 at 4:01 PM ET
Stocks tacked on more gains in the last session before a long holiday weekend Friday, extending a solid Santa Claus rally that put the broad S&P 500 into positive territory for 2011.
Investors cheered the end of a congressional standoff over payroll taxes as President Barack Obama signed a two-month extension of the tax break into law.
The Dow Jones industrial average was up 124.35 points or 1 percent at the close, while the S&P 500 was up about 9 points. It was the fourth straight session of gains for the two closely followed big-company indexes, marking the first four-day win streak since July.
For the year the Dow is up 6 percent, while the S&P is up less than 1 percent. Trading was relatively light, and bond markets closed early for the holiday.
Stocks have gained steadily for the past three days on hopeful signs about the pace of economic growth in the fourth quarter, which ends next week. New claims for unemployment benefits fell last week to the lowest level since April 2008, long before anyone realized the nation was in a recession.
Financial markets are closed Monday for the Christmas holiday.
New U.S. single-family home sales rose to a seven-month high in November and the supply of houses on the market was the lowest in more than five years. The data added to signs of a budding recovery in the sector, which continues to be a serious overhang for markets. Banks have been especially hard hit, with financials the worst performing S&P sector this year.
"The data have been improving, and that's leading to an improvement in investor sentiment, which is contributing to the more confident tone in the market," said Lawrence Glazer, managing partner at Mayflower Advisors in Boston.
"Also, there's something psychologically significant in our turning higher for the year."
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As it did yesterday, Bank of America (NYSE: BAC) once again appeared at the top of the list of gainers, rising about 1.7 percent. A Reuters report suggested that despite the bank's attempts to raise capital, it will need to consider even more asset sales in order to keep up with competitors and comply with new capital rules slated to take effect over the next decade.
Disney (NYSE: DIS) and Verizon (NYSE: VZ) also performed well, each rising about 1.5 percent in mid-afternoon trading. Disney has had a mixed 2011, with lackluster reception for its films and a rare earnings miss early in the year. Meanwhile, Verizon is seeing strength in activations of Apple (Nasdaq: AAPL) iPhones, despite analyst concerns that those sales will hit margins and hurt earnings.
Alcoa (NYSE: AA ) topped the losers list, falling 0.7 percent and extending its huge losses for the year. Despite a cheap valuation, the aluminum producer faces some serious challenges in its future, with automakers and aircraft companies looking to replace aluminum with carbon fiber composites and plastic.
(The Associated Press and Reuters contributed to this report)