Wall Street feels more optimistic

Associated Press

NEW YORK — Stronger than expected holiday sales at Wal-Mart and Yahoo! sent stocks climbing Wednesday as investors allowed themselves to feel a little more optimistic about consumer spending and, in turn, the economy.

But Wall Street’s enthusiasm faded late in the session, frustrating expectations of a big post-Christmas rally. Escalating tensions between India and Pakistan also weighed on the market.

"This is still a good rally," said Al Goldman, chief market strategist at A.G. Edwards &Sons Inc. "But we’ve come awful far, awful fast. And when people saw the Dow up more than 100, they started selling to take profits."

The Dow Jones industrial average closed up 52.73, or 0.5 percent, at 10,088.07, according to preliminary calculations, after rising as much as 133 earlier in the session.

Broader stock indicators also finished higher despite some late afternoon selling. The Standard &Poor’s 500 index gained 4.72, or 0.4 percent, to 1,149.37. The technology-focused Nasdaq composite index rose 16.22, or 0.8 percent, to 1,960.70.

Wal-Mart Stores rose $1.02 to $58.15 after reporting sales from Thanksgiving through Christmas Eve were higher than expected.

Investors also rewarded Yahoo!, sending it up 84 cents to $17.51 after the online company reported that holiday sales rose 86 percent from the previous year. The enthusiasm spread to Amazon.com, which rose $1.27 to $11.10, on hopes that its results would improve, too.

The news indicated that, despite one of the most disappointing pre-holiday sales season in years, consumers are still spending.

"Christmas sales haven’t been spectacular, but what these new numbers are telling you is that they may not have been as terrible as feared," said Larry Wachtel, market analyst for Prudential. "I think that’s helping sentiment."

Tech stocks also climbed, including those companies that depend on computer sales for business. Gateway advanced 17 cents to $7.54, while Intel rose 27 cents to $32.29.

Energy stocks were higher on news that OPEC expected to approve a reduction in oil output by week’s end, a decision that likely would help stabilize sagging prices. ExxonMobil gained 60 cents to $39.60.

Still, Wall Street was closely watching political tensions between India and Pakistan. Some fear the two nuclear-armed nations are headed for war. Also, U.S. troops remain in nearby Afghanistan.

Aside from political conflicts or the possibility of more terrorist attacks, most analysts expect the remaining trading sessions in 2001 to be subdued. Most fund managers have already finished making year-end adjustments to their portfolios, and many investors have completed any tax selling.

"Christmas and New Year are historically a good time for the market," Goldman said.