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Markets gain after Merrill news; traders hope for Christmas rally

Markets gain after Merrill news; traders hope for Christmas rally

Wall Street advanced sharply Monday, boosted by news that Merrill Lynch & Co. will receive an investment of up to US$6.2 billion from two investment groups. The Dow Jones industrial average rose nearly 100 points.
Trading volume was light in Monday's abbreviated session - a typical occurrence a day ahead of Christmas. Still, with only five trading days remaining in 2007, investors were perhaps looking for any opportunity to tidy up their positions after a year that brought the return of volatility after several years of unusual calm.
Merrill Lynch provided the only significant news of the day. The investment firm said it was receiving a widely expected cash infusion from Singapore's government-controlled investment fund, Temasek Holdings, and U.S.-based Davis Selected Advisers. The proceeds were expected to cushion Merrill's mortgage-related writedowns for the fourth quarter.
The largest U.S. brokerage also said it would sell most of its commercial finance unit to GE Capital. Terms of the deal weren't made public.
"The market is tacking on strong gains from Friday, a last-minute Santa Claus rally," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners. "The Merrill Lynch investment adds to stability in the market. I look at it as a vote of confidence on the part of foreign investors."
Monday's gains have some investors hoping for a so-called Santa Claus rally - a year-end surge that often extends into the new year and can burnish portfolios. On Friday, the Dow rose more than 200 points and, along with the other major indexes, posted a gain of more than 1.5 percent for the session.
According to preliminary calculations, the Dow rose 98.68, or 0.73 percent, to 13,549.33.
Broader market indexes also advanced. The Standard & Poor's 500 index added 11.99, or 0.81 percent, to 1,496.45; and the Nasdaq composite index rose 21.51, or 0.80 percent, to 2,713.50.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.21 percent from 4.17 percent late Friday. The dollar was mixed against other major currencies, while gold prices rose.


Updated : 2021-06-13 04:33 GMT+08:00