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Stocks jump as investors eye third straight day of gains

Stocks jump as investors eye third straight day of gains

Stocks jumped in morning trading Wednesday as a late-year rally looks to extend to a third day as Wall Street attempts a last-ditch effort to turn 2015 into a winning year. While the official Santa Claus rally timeframe (the last 5 trading days of the year and the first two sessions of the new year) doesn’t begin until tomorrow on Christmas Eve, the bulls have already kicked off a late-year push to transform a U.S. stock market now still in the red for the year into the black. (Normally, the S&P 500 posts an average gain of 1.5% during the 7-session Santa Claus rally, according to The Stock Trader’s Almanac. The failure of stocks to rally during this time tends to precede bear markets or times when stocks could be purchased at lower prices later in the year.)1215-stock-market_full_600

The Dow Jones industrial average was up about 130 points, or 0.7%.The broader Standard & Poor’s 500 stock index was up 0.8% and the Nasdaq composite gained 0.6%. Heading into Wednesday’s trading session, the Dow  was down 2.3% in 2015 and the broader S&P 500 was off 1% for the year. Both U.S. stock indexes are at risk of finishing with negative returns in a calendar year for the first time since 2008, when the financial crisis was in full swing. The Dow has been very turbulent so far in December. The blue-chip stock gauge has endured closing point swings of 100 points or more in 14 of 16 December trading sessions, including eight straight. This week the Dow has posted triple-digit gains on Monday and Tuesday, trimming its year-to-date 2015 loss.

Much of the volatility has been generated by angst and uncertainty surrounding the Federal Reserve’s first interest rate hike in nearly a decade, which came last week, as well as fears about the pace of future rate hikes next year. Persistent weakness in the price of oil, which fell below the key $35 per barrel level last week, has also been weighing on investor sentiment, as crashing oil prices has raised concerns that weakened U.S. suppliers could have trouble making bond payments. This week, however, U.S.-produced crude has climbed back above $36 per barrel, and oil is gushing higher again Wednesday. In early trading, U.S. crude was up 97 cents, or 2.7%, to $37.11 per barrel.

“Oil is up for the third session in a row,” Bespoke Investment Group told clients, adding that U.S.-based crude prices are now at parity with its “European cousin Brent” crude. On Tuesday, the price of U.S. crude rose above that of Brent, a sign that the supply gut is a global issue. Investors have also been in a buying mood as the holiday season kicks in, a seasonal phenomenon that often occurs but is driven by factors that are hard to quantify. In economic data released this morning before the opening bell, durable goods orders, or orders for big-ticket, long-lasting items like refrigerators and clothes dryers, were unchanged in November, which was better than the negative 0.6% reading expected by Wall Street economists. Personal spending in November also rose a solid 0.3%.