Stocks rose in quiet, pre-holiday trading Friday. The S&P 500 index turned positive for the year.
Traders were relieved by news that Congress extended a payroll tax holiday for workers and emergency unemployment benefits. The programs were set to expire at the end of the year. Letting that happen would have reduced economic growth by about 1 percent, analysts said.
Stocks have gained steadily for the past three days on hopeful signs about the pace of economic growth in the fourth quarter, which ends next week. New claims for unemployment benefits fell last week to the lowest level since April 2008, long before anyone realized the nation was in a recession.
A series of mixed economic reports Friday failed to derail that optimism. The Standard & Poor’s 500 index added 8 points, or 0.6 percent, to 1,261 shortly before noon Eastern time. It started the year at 1,257.
Stocks might surge into the new year if the S&P 500 passes a couple of key technical thresholds, said Todd Salamone, research director at Schaeffer’s Investment Research.
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Fund managers currently hold relatively few stocks, Salamone noted, and many of their funds have underperformed the market and are negative for the year. If the index rises farther above its break-even point for the year or its average over the past several months, fund managers might flood into the market in a last-ditch attempt to boost their performance, he said.
“The worst thing that can happen for a fund manager is to underperform and be in the red when your benchmark, the S&P index, is in the green” for the year, Salamone said.
The Dow Jones industrial average rose 78, or 0.6 percent, to 12,257. All but 3 of the 30 Dow stocks rose.
The Nasdaq composite index gained 11, or 0.4 percent, to 2,610.
Trading volume was light in the final session before the Christmas holiday. The market will be closed on Monday because Christmas falls on a Sunday this year.