Investors shook off some their worries about the strength of holiday sales and Dubai's financial problems, and extended the stock market's big November gain. Stocks fluctuated through the day Monday, but traders ultimately were not deterred by reports that retail sales were overall uninspiring during the Thanksgiving weekend. Media reports that Dubai is working to restructure its debt gave stocks a late-day lift, while demand for safe havens like the dollar fell.
Stocks are turning in their best monthly performance since July. In late afternoon trading, the Dow Jones industrial average rose 32.58, or 0.3%, to 10,342.50. The broader Standard & Poor's 500 index rose 3.60, or 0.3%, to 1,095.09, and the Nasdaq composite index rose 4.49, or 0.2%, to 2,142.93.
Investors, satisfied for the moment that credit problems in the Middle Eastern city-state of Dubai weren't a sign of spreading troubles, turned their attention to consumers, whose spending is the biggest driver of the U.S. economy. Preliminary figures by ShopperTrak, a research firm that tracks more than 50,000 outlets, showed that sales rose 0.5% on Friday, the start to the holiday shopping season. Online sales jumped 11% Thursday and Friday, according to comScore, an Internet research firm.
Investors have been worried that rising unemployment would make shoppers uncomfortable about spending during the holidays. Traders are already looking to the government's November unemployment report, which is due Friday.
The National Retail Federation, a trade group, said Sunday it still expects holiday sales to slip 1% compared with last year.
Benny Lorenzo, CEO of the investment bank Kaufman Bros. in New York, said the retail numbers might not look as impressive because there were so many markdowns and clearance sales last year. He said investors are cautious about the results but pointed to Internet retailers as one area of strength.
"Certainly in a market like this it could've been a lot worse for sure," he said. "The online vendors, they seem to have done pretty well."
Advancing stocks outpaced those that fell on the New York Stock Exchange, where volume came to a light 718.5 million shares.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.20% from 3.21% late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.06% from 0.01%.
The dollar fell against other major currencies, while gold rose.
Ethan Anderson, a senior portfolio manager at Rehmann Financial in Grand Rapids, Mich., said record-low interest rates are leaving even hesitant investors with few options for generating decent returns.
"A lot of investors right now are looking for a reason to get out," he said. "The question is where else can you put your money."
The stock market's modest moves came after stocks tumbled Friday on concern about Dubai's debt problems. The Dow ended with a loss of 155 points after being down more than 200 in the early going.
Investors were initially anxious about the possibility that a debt default by Dubai could touch off a new round of lending problems even as credit markets are still recovering from last year's near-shutdown following the collapse of Lehman Brothers.
However, it appeared U.S. investors hold little of Dubai's debt, which has eased some concerns. The United Arab Emirates, where Dubai is located, also said Sunday it will make extra funding available to all banks in the country, including foreign banks with local offices.
Rob Lutts, president and chief investment officer of Cabot Money Management, said that while some investments will be lost in Dubai, global stock markets are accounting for the potential losses.
"We've seen the impact," he said, pointing to the drops last week. "I think that issue is known now."
The broader worry is that banks and other lenders would reduce financing in other emerging markets because of fears of default, Lutts said.
The market drew some support from an unexpected improvement at factories. The Chicago Purchasing Managers index, which measures Midwestern manufacturing, rose to 56.1 in November from 54.2 in October. New orders rose and employment improved, while production expansion slowed.
Among retailers, Macy's Inc. slid 79 cents, or 4.7%, to $16.18, while Target Corp. fell $1.16, or 2.4%, to $46.54.
Online retailers advanced. Amazon.com Inc. rose $3.84, or 2.9%, to $135.58, while eBay Inc. advanced $1.20, or 5.2%, to $24.42.
Most financial stocks rose ease fear about Dubai eased but American International Group Inc. tumbled on concerns that the insurer doesn't have adequate reserves to pay some potential claims. Todd Bault, a Sanford Bernstein analyst, said AIG faces an $11 billion shortfall to cover potential claims at its property and casualty insurance business, according to CNBC.
An AIG spokeswoman declined to comment. The stock fell $4.56, or 13.7%, to $28.74.
Light, sweet crude rose $1.40 to settle at $77.45 per barrel on the New York Mercantile Exchange after Britian said a racing yacht with five U.K. nationals aboard had been stopped by Iranian naval vessels and that they are now being held in Iran.
Overseas, Britain's FTSE 100, Germany's DAX and France's CAC-40 each lost 1.1%. Japan's Nikkei stock average rose 2.9%.
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