U.S. stocks jumped the most in three weeks on Friday, as strong results from the company behind the BlackBerry boosted technology shares while financials rose on a report that another U.S. brokerage may get a big foreign investment.
All three major indexes rose more than 1.5 percent, a lift that took them into positive territory for the week.
Investors were also heartened by a government report that showed U.S. personal spending jumped more than expected in November, suggesting consumers have not been discouraged by signs of a slowdown in the economy.
Bank stocks surged after the Wall Street Journal reported Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research) may get up to $5 billion in a capital infusion from Singapore state investor Temasek Holdings. In the third quarter, Merrill had to write down $8.4 billion on assets tied to risky subprime mortgages.
Adding to the buoyant mood, several brokerages lifted their ratings or price targets on shares of Research in Motion after the BlackBerry wireless device maker reported earnings that topped forecasts after Thursday's closing bell.
Technology is a sector that has earnings momentum behind it with good exposure to the foreign markets, said Craig Hester, CEO of Hester Capital Management in Austin, Texas.
The Dow Jones industrial average .DJI shot up 205.01 points, or 1.55 percent, to 13,450.65. The Standard & Poor's 500 Index .SPX leaped 24.34 points, or 1.67 percent, to 1,484.46. The Nasdaq Composite Index .IXIC climbed 51.13 points, or 1.94 percent, to 2,691.99.
For the week, the Dow rose 0.8 percent, the S&P gained 1.2 percent and the Nasdaq surged 2.1 percent.
SOVEREIGN WEALTH EFFECT
Merrill shares gained 1.9 percent to $55.54. Other financial-sector stalwarts also caught the wind in their sails, with Goldman Sachs (GS.N: Quote, Profile, Research) up 3.4 percent at $209.60 and Morgan Stanley (MS.N: Quote, Profile, Research) up 6.3 percent at $54.59.
A developing theme, rooted in the wreckage of the credit crunch, is that Gulf and Asian state investors, awash with cash, have been moving into large Western banks.
According to a Financial Times report, Saudi Arabia is planning to establish a sovereign fund that is expected to be larger than $900 billion.
The fact you're seeing sovereign wealth funds make investments shows that they see value in these financial companies, and the market is taking some comfort from that, Hester said.
But there is still reason for caution as there is no transparency about the kind of toxic waste financials have on their balance sheet.
Research in Motion shares popped up 10.9 percent to $118.63 on the Nasdaq.
Among consumer companies reporting results on Friday, drugstore chain Walgreen Co (WAG.N: Quote, Profile, Research) posted earnings that topped estimates, while consumer electronics retailer Circuit City (CC.N: Quote, Profile, Research) disclosed a wider-than-expected loss.
Walgreen shares rose 6.1 percent to $38.47 on the New York Stock Exchange.
In contrast, Circuit City's stock plummeted 28.7 percent to $4.75 and topped the NYSE's list of biggest percentage losers.
The Reuters/University of Michigan Surveys of Consumers index of consumer sentiment showed consumers' mood improved slightly in late December, but it still soured for the month as a whole.
Stock market volume was strong. Friday is the last major trading day before year-end holidays and also marked the expiration of equity derivatives contracts in the quarterly event known as quadruple witching.
About 2.34 billion shares changed hands on the New York Stock Exchange, flying past last year's estimated daily average of 1.84 billion, while on the Nasdaq, about 2.56 billion shares traded, also topping last year's daily average of 2.02 billion.
Advancing stocks outnumbered declining ones by a ratio of about 3 to 1 on the NYSE and by 2 to 1 on Nasdaq.