Dow up 250 as economy looks stronger

Updated: 7:12 p.m. ET

Call it a Santa Claus rally, or a Hanukkah rally for the first day of the Jewish Festival of Lights.

Fact is, stocks enjoyed their biggest rally since September as economic report after economic report points toward a domestic economy gaining strength.

One report showed a better-than-expected​ gain in private-sector employment. The Institute for Supply Management's report on November manufacturing suggests the sector is holding its own. Auto sales were generally bullish, with buyers opting for large SUVs and pickups.

The Federal Reserve's Beige Book report described an economy that's showing modest but broad improvement. The New York region, the Midwest and the middle Atlantic states appeared to show the most strength.

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The Dow Jones industrials ($INDU) closed up 250 points, or 2.3%, to 11,256.

The Standard & Poor's 500 Index ($INX) surged 26 points, or 2.2%, to 1,206, its first close above 1,200 since Nov. 11. And the Nasdaq Composite Index ($COMPX) shot up 51 points, or 2.1%, to 2,549.

Futures trading suggests the market will open higher on Thursday. The important economic reports are initial jobless claims and pending home sales.

Supermarket operator Kroger (KR) and homebuilder Toll Bros. (TOL) are the top earnings reports.

The Dow was up as many as 270 points before falling back. One reason for the peak was a suggestion the United States might help with a European financial rescue package.

The Dow and S&P 500 had their biggest point gains since Sept. 1. The Nasdaq's gain was its largest since Oct. 5, when it gained 55 points.

The rally was very broad and deep. Volume was solid. The Dow Jones Transportation Average ($DJT) briefly topped 5,000 for the first time since September 2008. The index was up 116 points, or 2.4%, to 4,971.

The rally pushed interest rates higher as the stock market drew cash away from bonds. The 10-year Treasury yield was at 2.964%, up from Tuesday's 2.797%.

It also set off a commodity rally. Crude oil settled up $2.64 to $86.75.

Gold for February delivery settled up $2.20 to $1,388.30 an ounce. Silver for March delivery settled up 20 cents to $28.41 an ounce. Copper added 12.2 cents to $3.9475 a pound.

The dollar was slightly lower against major currencies. The U.S. Dollar Index, a measure of the greenback against a basket of currencies, was off 0.546 to 80.725 at 4:15 p.m. ET.

All 30 Dow stocks were higher, led by Home Depot (HD), up 4.6% to $31.61.

Ninety-six of the stocks in the Nasdaq-100 Index ($NDX.X) were higher, led by Altera (ALTR), up 5.2% to $36.93, and flash-memory maker SanDisk (SNDK), up 5.2% to $46.90.

The Nasdaq-100 was up 48 points, or 2.3%, to 2,165.

Apple (AAPL), the biggest stock in the Nasdaq-100, was up 1.7% to $316.40, adding 7 points to the index's gain. Microsoft (MSFT), up 3.1% to $26.04, added 2.6 points to the index. (Microsoft publishes MSN Money.)

Fewer than a dozen S&P 500 stocks were lower on the day. Building materials manufacturer Masco (MAS) was the leader, up 7.1% to $11.68, followed by Red Hat (RHT), up 6.3% to $46.23, a 52-week high.

Audio-equipment maker Harman International Industries (HAR) added 6% to $46.20. The stock was upgraded to "overweight" from "neutral" by analysts at JPMorgan Chase. They cited luxury-car demand in the U.S. and China as well as the potential for a wider profit margin.

Energy and industrials were the strong market sectors, but all 10 sectors of the S&P 500 were higher. Exxon Mobil (XOM) was up 2.5% to $71.33. Halliburton (HAL) added 3.8% to $39.19, and Cameron International (CAM) was up 3.8% to $49.92.

Auto sales looking decent

Not a bad month for auto sales: Automakers saw deliveries jump 16.9% from a year ago. The seasonally adjusted annual sales rate of 12.26 million units was unchanged from October but up 13% from a year ago.

General Motors (GM) reported an 11.4% increase in November sales from a year ago; Ford Motor (F) chimed in with a 24.3% increase.

Ford retained its position as the No. 2 U.S. seller of motor vehicles after Toyota (TM) reported a 3% sales decline.

Chrysler showed an eighth straight monthly gain, with sales up 17% from a year ago. Results were powered by an 86% increase in sales of Dodge Ram pickups and a 256% gain for Jeep Grand Cherokees.

Also showing strong results: Hyundai (HYMLF), up 45%; Daimler (DAI), the parent of Mercedes Benz, up 10.3%; Kia, up 48%; and Nissan (NSANY), up 26.8%.

GM shares were up 1.7% to $34.78. Ford added 3.3% to $16.46. Despite its sales results, Toyota was up 2.4% in New York to $79.58.

Jobs and manufacturing look stronger
The immediate catalyst for today's rally was a report that the private sector boosted employment by 93,000 in November. The report from Automatic Data Processing also revised its estimate of job gains for October from 43,000 to 85,000.

At the same time, the ISM's manufacturing index registered a small decline from October. The index was at 56.6, where anything above 50 means manufacturing is expanding. The index was above 50 for the 16th straight month.

At the same time, manufacturing in China expanded at the fastest pace in seven months.

And there was speculation from Europe that the European Central Bank will enact measures to contain the  debt crisis when policymakers meet Thursday. 

Stocks briefly extended gains after Reuters reported that the United States may support enlarging a European financial rescue program by adding cash from the International Monetary Fund. But the report was greeted with some skepticism.

Stocks seeing sizable gains
Although this rally lifted nearly all stocks, there were some interesting moves, including:

• Google (GOOG), up 1.6% to $564.35. The search-engine giant will open an online store for electronic versions of books in the U.S. this year and internationally in 2011.
• Microsoft's gain came on reports that the software maker expects a five- to 10-year growth spurt in games and 2011 could be the “biggest year ever,” said Dennis Durkin, chief operating officer of the company’s Xbox unit.
• United Technologies (UTX), up 4% to $78.26. Airbus' announcement that it plans to develop new versions of the A320 series of aircraft with more fuel-efficient engines is “positive” for the maker of Pratt & Whitney jet engines and General Electric (GE), Deutsche Bank AG said in a note. GE was up 3% to $16.30.
• Consol Energy (CNX), up 4.1% to $43.69. The coal producer was boosted to “strong buy” from “outperform” at Raymond James Financial.
• Jos. A. Bank Clothiers (JOSB), down 6.7% to $42.03. The maker of men’s apparel posted third-quarter profit of 45 cents a share, missing the 50-cent average analyst estimate.
• Casino shares advanced after Macau’s casino revenue surged 42% last month. Wynn Resorts (WYNN) was up 3.7% to $104.79. Las Vegas Sands (LVS) added 2.5% to $51.34. Melco Crown Entertainment (MPEL) increased 2.9% to $6.14.