Wall Street put together a moderate advance in light post-holiday trading this week after the finance arm of General Motors got a government lifeline, but dreary holiday spending readings dimmed the chance of a big year-end rally. Not surprisingly, Americans spent much less on gifts this season than they did last year, according to SpendingPulse, a division of MasterCard Advisors. Retail sales dropped between 5.5 percent and 8 percent compared with last year. Personal consumption is a huge part of US economic activity - comprising more than two-thirds of gross domestic product - so Wall Street is nervous that a more frugal consumer could keep the economy weak in 2009. Investors did get a some good news on Christmas Eve, when the Federal Reserve allowed GMAC Financial Services - the finance arm of struggling Detroit automaker General Motors Corp. - to become a bank holding company and thus qualify for the government's $700 billion rescue fund. Analysts had said that without financial help, GMAC might have had to file for bankruptcy protection or shut down. December is usually a strong month for stocks, and a flurry of trading known as a “Santa Claus rally” is often seen in the final week. “I think we could have a year-end rally, but it's got a formidable headwind in the form of tax-selling, in my view,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisers. The Dow Jones industrial average rose 47.07, or 0.56 percent, to 8,515.55 after Thursday's market holiday. Broader stock indicators also rose. The Standard and amp; Poor's 500 index rose 4.65, or 0.54 percent, to 872.80, and the Nasdaq composite index rose 5.34, or 0.35 percent, to 1,530.24. The Russell 2000 index of smaller companies rose 6.28, or 1.33 percent, to 476.77. For the week, the Dow ended down 0.74 percent, the S and P 500 fell 1.7 percent and the Nasdaq lost 2.1 percent. Investors are flummoxed over what 2009 might bring. Market analysts are predicting a stock market recovery, but nearly all are doing so with the caveat that anything is possible. “It's hard to imagine another year that is going to be as dismal or dark or bad as 2008,” Johnson said. “It's even hard to imagine that we have another down year in 2009 - the odds are the stock market will be higher at the end of 2009. Common sense tells you that.” The Dow is down 35.8 percent for the year. Light, sweet crude rose $2.36 to $37.71 a barrel on the New York Mercantile Exchange. Crude prices had tumbled Wednesday for the ninth straight day - dipping as low as $35.13 - after gloomy economic reports and growing stockpiles of unused gasoline suggesting eroded demand.
