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New York. Wall Street hopes to see another “Santa Claus rally” this week, when stocks traditionally rise as investors wrap up the year, amid growing optimism and a spectacular monthly rally.

The market remained on a tear this passing week, on track to make December’s gains the strongest since 1991, according to analysts.

The passing week, cut short by the long Christmas weekend, was marked by slow and range-bound trade.

Even Thursday’s slew of data which reaffirmed that the US economy was slowly recovering, made only a small impact.

The data showed new modest improvements in jobless claims and the struggling housing market as well as a rise in consumer spending and earning in November which made traders particularly happy amid a busy holiday shopping season.

The previous day, the Commerce Department revised slightly upward the US growth for the third quarter, a little less than most expectations, but still offering optimism.

“Thursday’s data were mixed, but the economy appears to be ending the year on a positive note; real GDP is tracking above our forecast for a 3 percent annualized gain,” said Ryan Sweet, from Moody’s Analytics.

In the week to Thursday, the Dow Jones Industrial Average rose 0.70 percent to 11,573.49 in the fourth straight week of gains that saw the benchmark return to levels last seen in August 2008. Since the start of the month, the Dow index has gained 5.16 percent, positioning it for the strongest December since 1991.

The broader S&P 500 index added 1.03 percent, while the technology-rich Nasdaq composite index rose 0.86 percent to 2,665.60 points, its highest level in three years.

This week, also shortened due to the New Year’s holiday on Friday, is set to remain in low gear as many traders go on holiday and reports on consumer confidence and weekly jobless claims the only major indicators planned.

“Going into next week it is going to be a very slow week, we are going to sit and wait until we see what these December retail sales really suggest,” said Lindsey Piegza, from FTN Financial.

The robust gains on Wall Street in recent weeks were largely due to investors seeking to improve their portfolios ahead of the year’s end as the economy showed signs of improvement, said analyst Marc Pado, from Cantor Fitzgerald.

“When the market refused to give ground, and jumped up, it caught a lot of fund managers by surprise and forced them to chase performance,” he said.

Pado nevertheless warned that the spectacular rally of recent weeks could change direction in January.

“There is no question that the market is overbought so we are due for a correction; the question is when. The pressures on the market are related to the calendar more than to the fundamentals,” he said. Financial stocks were the bulwark of the gains on the market this week, with Bank of America rising 3.9 percent and JPMorgan soaring 6.1 percent.


Agence France-Presse