US stocks extend rally

United States stocks rose on Friday, as the S&P 500 rallied for a fourth straight day and turned positive for the year after a run of better-than-expected economic data.Reuters reported on Friday that the S&P 500 had gained nearly five per cent over the last four days and is slightly higher for the year.Investors cited recent improvement in US economic data and seasonal factors behind the move, but many remained cautious about the 2012 outlook.The US Congress approved a two-month extension of a payroll tax cut for 160 million workers that otherwise would have expired on December 31.The resolution, if only temporary, removes a market headwind that investors said could have hit growth next year.New US single-family home sales rose to a seven-month high in November and the supply of houses on the market was the lowest in 5-1/2 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.More than anything, the better tone in housing is very suggestive that the jobs markets improved, the Chief Investment Officer at Wells Capital Management, Mr. Jim Paulsen, said.He said the latest data added more evidence that consumer spending and housing is responding to a little better jobs market.The S&P 500 edged above its 200-day moving average, a level that has proved difficult to maintain after plummeting below it in August. However, low holiday-season volume means investors are cautious of the move.We are in the two-week silly period here, so its kind of hard to put too much significance on any of it, Paulsen said.The Dow Jones industrial average gained 92.22 points, or 0.76 per cent, to 12,261.87. The Standard & Poors 500 Index rose 8.99 points, or 0.72 per cent, to 1,262.99.The Nasdaq Composite Index added 16.00 points, or 0.62 per cent, to 2,615.45. Volume was light ahead of the extended Christmas holiday weekend, and could still spark exaggerated market swings.A trader at Performance Trust Capital Partners in Chicago, Mr. Brian Battle, warned about reading too much into the markets recent run. He said he was cautious heading into the New Year, with Europes debt crisis unresolved, growth still weak, and a U.S. presidential election looming.We should all be careful not to deem it as the end, he said. We might take it all back in January.
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