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Stocks closed sharply higher today in a pre-holiday rally, boosted by a fall in oil prices linked to higher energy stockpiles and a rise in shares of McDonald’s on hopes for strong sales of its new holiday gift cards. Even after such a big run-up, market analysts feel that the stock advance could continue through December.

Today, the Dow Jones industrial average closed up 44.66 or 0.4% to 10,916.09, the broader Standard & Poor’s 500 composite index closed up 4.38 or 0.3% to 1,265.61, while the Nasdaq composite index finished up 6.42 or 0.3% to 2,259.98. Both the Nasdaq and the S&P closed at fresh four-and-a-year highs.

The market breadth was positive. On the New York Stock Exchange, winners beat losers by more than 19 to 13 as 1.45 billion shares changed hands. On the Nasdaq, advancers topped decliners by 15 to 14 on volume of 1.62 billion shares. Considering a shorter trading session, volume on Friday will likely be light, with many Wall Street professionals opting to take a four-day weekend. However, the day is of great significance to the retail sector, as everyone looks to gauge the strength of Black Friday, which marks the start of the holiday shopping period.

Twenty-three of the 30 Dow issues advanced, with McDonald’s closing up 2.2% at $33.71 after the company launched a major U.S. media blitz for its Arch Card, its latest twist on gift certificates. The other big gainers on the Dow were Intel that closed up $0.48 to $26.64, Pfizer finished up $0.26 to $21.64, JP Morgan ended up $0.58 to $38.78, and American Express closed up $0.65 to $52.40. Other gainers included telecom and networking shares, including Ciena up $0.08 to $2.80, Motorola closed up $0.62 to $24.62, and Lucent technologies finished up $0.07 to $2.97.

Steel stocks were the flavor of the day and in demand due to talk of further sector consolidation after French steelmaker Arcelor SA said it plans to launch a C$4.3 billion hostile bid for Canada’s Dofasco Inc. his indirectly gave a boost to U.S. Steel that closed up $1.00 to $40.77, and AK Steel Holding Corp that closed up $0.58 to $8.03.

Amongst losers, shares of Research in Motion slid down $0.80 to $66.28, after the maker of the BlackBerry wireless device cut its subscriber outlook for the rest of the fiscal year. Alexion Pharmaceuticals closed down $8.03 or 275 to $21.53, after saying that a late-stage trial of its heart drug failed to cut heart attacks by a significant amount. Petco dropped 9% to $21.20, and Calpine fell 15.1% to $1.18.

The pending merger between the New York Stock Exchange and Archipelago Holdings has been deemed deal fair to NYSE members, according to an independent analysis. Based on the deal’s 70-30 split, with 30% going to Archipelago shareholders, the combined company would be worth $8.88 billion.

Investors reacted positively to news from the Energy Department of a weekly increase of 1.1 million barrels in distillates inventories, alongside a 400,000-barrel rise in the nation’s crude stocks and a 200,000-barrel expansion in gasoline supplies. U.S. light crude oil for January delivery fell 13 cents to settle at $58.71 a barrel on the New York Mercantile Exchange. Natural gas futures closed higher and the front-month contract was up 0.6 cent at $11.62 per million BTU.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter