By Associated Press
Stocks rose in quiet, pre-holiday trading Friday. The S&P 500 index turned positive for the year.
Traders were relieved by news that Congress extended a payroll tax holiday for workers and emergency unemployment benefits. The programs were set to expire at the end of the year. Letting that happen would have reduced economic growth by about 1 percent, analysts said.
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.
A series of mixed economic reports Friday failed to derail that optimism. The Standard & Poor’s 500 index added 8 points, or 0.7 percent, to 1,262 as of 1:30 p.m. Eastern time. It started the year at 1,257.
Stocks might surge into the new year if the S&P 500 passes a couple of key technical thresholds, said Todd Salamone, research director at Schaeffer’s Investment Research.
Fund managers currently hold relatively few stocks, Salamone noted, and many of their funds have underperformed the market and are negative for the year. If the index rises farther above its break-even point for the year or its average over the past several months, fund managers might flood into the market in a last-ditch attempt to improve their annual returns, he said.
“The worst thing that can happen for a fund manager is to underperform and be in the red when your benchmark, the S&P index, is in the green” for the year, Salamone said.
The Dow Jones industrial average rose 92, or 0.8 percent, to 12,261. All but four of the 30 Dow stocks rose.
The Nasdaq composite index gained 14, or 0.6 percent, to 2,613.
Trading volume was light in the final session before the Christmas holiday. The market will be closed on Monday because Christmas falls on a Sunday this year.
Earlier Friday, the government said that consumer spending and incomes rose just 0.1 percent in November. The weak gains suggest that consumers may have trouble sustaining their spending into 2012.
In another worrying sign, a measure of business investment decreased for the second straight month. Business investment has been a pocket of strong demand and spending amid a sluggish recovery. Companies bought more long-lasting manufactured goods, but the result was skewed by strength in the volatile aerospace industry.
Yet economic hopes remained high after this week’s encouraging news about the job market and strong holiday sales for retailers.
Among the companies making big moves:
— Rambus Inc. jumped 14.3 percent after the technology licensing company said it reached a patent license deal with Broadcom Corp. and settled a lawsuit with the chip maker.
— TripAdvisor Inc. rose 3.5 percent, the most in the S&P 500, as traders reassessed the value of the newly-spun off travel review website. The stock had fallen sharply since it officially started trading on Wednesday. It recovered some losses on Friday as analysts weighed its rapidly growing revenue and market share.
— Eastman Kodak Co. rose 9.3 percent after the struggling photography company said its general counsel, Laura Quatela, would become co-president on Jan. 1.