NEW YORK – U.S. stocks staged a broad rally on Wednesday, with the Dow rising above 12,500 to end at a record, as positive news for Ford Motor Co. (F) and other automakers, as well as for home builders such as Toll Brothers (TOL), spurred buying during what is already a traditionally strong week for equities.
The Dow Jones industrial average jumped 102.94 points, or 0.83 percent, to end at a record 12,510.57. The Standard & Poor's 500 Index advanced 9.94 points, or 0.70 percent, to finish at 1,426.84. The Nasdaq Composite Index climbed 17.71 points, or 0.73 percent, to close at 2,431.22.
Shares of Toyota Motor Corp. (TM) and Ford climbed after a meeting between the companies' top executives sparked investors' hopes for a potential alliance between the automakers.
Shares of U.S. home builders gained after a government report showed sales of new U.S. homes rose a stronger-than-expected 3.4 percent in November, suggesting that the housing market may have reached a bottom. Trading volume was sparse as many traders were away in the holiday week.
The last five trading days of the year and the first two trading days in January traditionally rank among the strongest. Those seven days, on average, have resulted in a 1.6 percent overall gain in the stock market every year since 1969, according to the Stock Trader's Almanac.
"There's a general tone of optimism that we will have a good January. A lot of 401(k) matches occur at the end of December and there is some 'window dressing' going on," said Jim Hardesty, president of Baltimore-based Hardesty Capital Management. "It would be embarrassing to have a 25 percent cash position on December 29th after this huge run-up we've had."
All three major U.S. stock indexes are poised to finish the year with double-digit percentage gains.
Wednesday's session marked the Dow's 22nd record close since the start of October. Earlier in the day, the blue-chip Dow average hit a fresh intraday high at 12,519.22.
All but one of the 30 Dow components ended the session higher.
Trading was extremely light on the New York Stock Exchange, with only about 974.7 million shares changing hands — far below last year's daily average of 1.61 billion. On Nasdaq, about 1.24 billion shares traded, below last year's daily average of 1.80 billion.
Advancing stocks outnumbered declining ones by a ratio of more than 7 to 2 on the NYSE and by nearly 5 to 2 on Nasdaq.
Although Toyota said the executives did not discuss the possibility of forming an alliance, the U.S.-listed shares of Toyota shot up 2 percent, or $2.65, to $134.26 and Ford's stock gained 1.2 percent, or 9 cents, to close at $7.58 on the NYSE.
Shares of Ford's bigger rival General Motors Corp. (GM) climbed 2.8 percent, or 82 cents, to $30.59, making GM one of the Dow's largest advancers.
The stock giving the Dow its biggest lift was International Business Machines Corp. (IBM), up 1.5 percent, or $1.44, at $97.10.
Shares of Lennar Corp., the third-largest U.S. home builder, rose 2.7 percent, or $1.36, to $52.61. The stock of luxury home builder Toll Brothers advanced 1.9 percent, or 60 cents, to $32.29.
The Dow Jones U.S. Home Construction Index was up 1.9 percent.
The Nasdaq was buoyed by Google Inc. (GOOG), up 2.3 percent, or $10.50, at $468.03..
Also helping the tech-heavy Nasdaq Composite Index were shares of Apple Computer Inc. (APPL), which recovered from an intraday drop of more than 5 percent on investors' worries related to a media report that federal prosecutors were looking closely at "apparently falsified" stock option documents at the company.
Analysts shrugged off the concerns, saying the options probe would not affect the financial results of Apple, the maker of iPod digital music players and Mac computers.
Apple shares ended the session 1 cent higher at $81.52.