A December to remember for stocks?

Updated: 7:15 p.m. ET

Stocks managed modest gains today, but the market's December performance is shaping up as the best in at least a decade.

Boosting the market were gains in bank, utility and energy shares -- and hopes for a decent economy in 2011. Real-estate and homebuilding shares were higher after a better-than-expected​ report on existing-home sales for November.

At the same time, crude oil settled above $90 a barrel for the first time since October 2008. That pushed airline shares lower. Tech shares were weaker, too.

The Dow Jones industrials ($INDU) closed up 26 points to 11,559, their best finish since Aug. Aug. 28, 2008. The Standard & Poor's 500 Index ($INX) added 4 points to 1,259, its best finish since Sept. 3, 2008. The Nasdaq Composite Index ($COMPX) was up 4 points to 2,671, its best finish since Dec. 28, 2007.

The Dow and Nasdaq are up 5% and 6.9%,  respectively, for the month and are looking at their best December performances since 1999. The S&P 500, up 6.5%, is seeing its best December since 1991.

There will be a full day of trading on Thursday, with markets closed Friday for Christmas.

Reports are due on initial jobless claims, personal income and spending, durable-goods orders, new-home sales and consumer confidence.

While there are no major earnings reports on Thursday,  results from Bed Bath & Beyond (BBBY) and Micron Technology (MU) may affect stocks.

Bed Bath & Beyond shares were up 5.5% to $50.30 after hours after earnings beat Street estimates and the company announced a $2 billion share buyback program. Shares had risen 0.3% to $47.67 in regular trading.
 
Micron shares were off 3.5% after hours to $7.99 after revenue and earnings both missed Street estimates. Shares had risen 1.7% to $8.28 in regular trading.

Futures trading suggests a flat open for stocks.

Stocks making moves

• ARM Holdings (ARMH), up 3.3% to $20.43. Microsoft (MSFT) is set to unveil a version of its Windows computer operating system that runs on the British company’s technology for the first time. Microsoft added 0.4% to $28.19. (Microsoft is the publisher of MSN Money.)
• Carnival (CCL), up 3.1% to $46.59. The cruise-line operator was raised to "buy" from "hold" at Standard & Poor's.
• Jacobs Engineering Group (JEC), up 4.9% to $46.32. The engineering company will expand its metals and mining businesses after agreeing to buy some operations from Norwegian company Aker Solutions (AKKVF) for about $675 million. Aker's American Depositary Units were up 8.1% to $17.04.
• Krispy Kreme Doughnuts (KKD), down 5.6% to $7.57. The doughnut chain was cut to "sell" from "hold" at BGB Research.
• Red Hat (RHT), down 2.5% to $46.70. Fiscal-third-quarter​ results disappointed investors.
• Xilinx (XLNX), up 0.9% to $28.63. Shares dropped as much as 6.3% after the open after the chip maker said December quarter sales will be down 7% to 9% from the previous quarter. Earlier estimates saw revenue flat to down 4%.

Energy prices -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Crude oil			$90.48			$89.82			7.57%			14.01%
(per barrel)
Heating oil			$2.5285			$2.5164			9.13%			19.52%
(per gallon)
Natural gas			$4.1520			$4.0590			-0.67%			-25.48%
(per mil. BTU)
Unleaded gasoline			$2.4245			$2.3985			7.03%			18.10%
(per gallon)
Retail gasoline			$2.9970			$2.9830			5.01%			13.57%
(per gallon; AAA)

Crude hits a 2-year high; airline shares fall
Crude oil settled at $90.48 a barrel, up 66 cents from Tuesday. Crude has risen 7.6% this month and 14% for the year. The national average price of gasoline hit $2.997 a gallon today, AAA's Daily Fuel Gauge Report said. That's up 5% for the month and 13.6% for the year.

Airline shares were falling as oil moved up. American Airlines parent AMR (AMR) dropped 1.2% to $7.95 and is down 7.1% this month. United Continental Holdings (UAL), parent of United and Continental airlines, finished up 0.4% to $24.41. Shares are off 6.5% this week alone and 11.5% for the month.

Gold, meanwhile, was off $1.40 to $1,387.40 an ounce.

Profit-taking hit many non-energy commodities, with silver, copper, cotton and sugar futures all lower.

The 10-year Treasury yield was at 3.346%, up from 3.326% on Tuesday.  The dollar was higher against major currencies. There was more concern that the European debt crisis was worsening.

A big bet on 2011
The rally reflects what appears to be enormous confidence that 2011 will be a much better year for the economy and for stocks. Investor sentiment surveys indicate growing bullishness, and volatility indexes, which offer a look at investor fear, are at their lowest levels since April.

The confidence is coming from evidence of stronger manufacturing, a stabilizing banking system and some growth in consumer spending. That has to be offset by the nation's high unemployment levels.

One sort-of downside to today's cheery news came from the latest estimate on third-quarter growth. 

The Commerce Department said gross domestic product grew at an annualized 2.6% in the quarter; its prior growth estimate had been 2.5%.

The rub was that economists had expected a 2.7% growth rate.

Existing-home sales rose 5.6% in November from October to a better-than-expected​ annual rate of 4.68 million units, the National Association of Realtors said. Economists had expected a 4.65-million annualized growth rate.

That was the good news. The bad news is that existing sales were down 27.9% compared with a year ago. Inventories were up 5.4% from a year ago.

Thirty-two percent of buyers were first-time buyers. An additional 19% of buyers were investors. All-cash sales represented 31% of sales.

Broad gains in bank stocks
Bank of America (BAC) and JPMorgan Chase (JPM) were the top Dow performers, up 3.1% to $13.38 and 2.8% to $42.16, respectively. They were responsible for about nearly half the Dow's gain.

Their gains, along with gains for Wells Fargo (WFC), US Bancorp (USB) and Northern Trust (NTRS), were part of that continuing rally in financial stocks that has seen the KBW Bank Index ($BKX) rise 4.4% this week and 16.8% in December.

Some of the rally was due to bank stocks' basic cheapess after the 2008 financial crash. Plus, investors are growing more confident about the economy. Takeover speculation is also at work.

Hancock Holding (HBHC) of Gulfport, Miss., is acquiring Whitney Holding (WTNY) of New Orleans in a $1.4 billion stock swap. The deal values Whitney at $15.48 a share, a 42% premium over Tuesday's close. Whitney shares were up 28.8% to $14. Hancock was off 6.6% to $34.58.

Whitney, long known for its conservatism, had been hit hard by soured real-estate loans in Florida.

Regions Financial (RF) was the top S&P 500 performer, up 7.1% to $6.91, a reflection of takeover speculation after the Whitney-Hancock deal.

Last week, Bank of Montreal (BMO) agreed to buy Milwaukee's Marshall & Ilsley (MI) for $4.1 billion. Toronto-Dominion Bank (TD) will buy Chrysler Financial from Cerberus Capital for $6.3 billion.

Twenty-two of the 30 Dow stocks were higher on the day. The third- and fourth-best performers were General Electric (GE), up 1.7% to $18.06, and Alcoa (AA), also up 1.7% to $15.14.

Fifty-one Nasdaq-100 ($NDX.X) stocks were higher, led by News Corp. (NWSA), up 3.2% to $14.95. The index added 1 point to 2,236.

Walgreen (WAG) was the second-best S&P 500 stock, up 5.5% to $38.85. Strict cost controls helped produce strong fiscal-third-quarter​ profits. Nike (NKE) was the laggard, down 5.8% to $86.95. New orders were slightly lower than expected in its latest quarterly report. Rival

Short hits from the markets -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.130%			0.130%			-18.75%			160.00%
5-year Treasury note			2.001%			1.962%			36.68%			-25.50%
10-year Treasury note			3.346%			3.326%			19.63%			-12.93%
30-year Treasury bond			4.446%			4.431%			8.39%			-4.20%
Currencies
U.S. Dollar Index			81.073			81.069			-0.24%			3.65%
British pound			$1.5394			$1.5477			-1.12%			-4.83%
(in U.S. $)
U.S. $ in pounds			£0.650			£0.646			1.14%			5.08%
Euro in dollars			$1.310			$1.310			0.86%			-8.57%
(in U.S. $)
U.S. $ in euros			€ 0.763			€ 0.763			-0.86%			9.37%
U.S. $ in yen			83.752			83.720			-0.08%			-9.94%
U.S. $ in Chinese			6.671			6.658			-0.35%			-2.27%
yuan
Canada dollar			$0.987			$0.983			1.19%			3.80%
(in U.S. $)
U.S. dollar			$1.014			$1.017			-1.18%			-3.66%
(in Canadian $)
Commodities
Gold			$1,387.40			$1,388.80			0.17%			26.56%
(per troy ounce)
Copper			$4.28			$4.28			11.82%			27.75%
(per pound)
Silver			$29.39			$29.39			4.26%			74.44%
(per troy ounce)
Wheat			$7.835			$7.6500			20.45%			44.69%
(per bushel)
Corn			$6.090			$6.0225			14.91%			46.92%
(per bushel)
Crude oil			$90.48			$89.82			7.57%			14.01%
(per barrel)