Stocks Finish Broadly Higher

Major indexes got a lift from a far better than expected reading from a key measure of consumer sentiment for December

Stocks rallied on Tuesday, lifted by an unexpectedly strong improvement in U.S. consumer sentiment in December and a bullish report on online retailer Amazon.com (AMZN ).

The Dow Jones industrial average ended up 78.26 points, or 0.73%, to 10,854.39. The broader Standard & Poor's 500 index gained 8.60 points, or 0.71%, to 1,213.52. The Nasdaq composite index added 22.97 points, or 1.07%, to 2,177.19.

Looking ahead to Wednesday, there are no major earnings reports scheduled for the next session.

In economics news, existing home sales for November are due out, with economists expecting an increase to a 6.80 million annualized pace from 6.75 million in the previous session.

On Tuesday, the Conference Board's consumer confidence report jumped to 102.3 in December from a revised 92.6 in November (from 90.5 initially). This is the first increase in the confidence measure since the robust 105.7 reading in July, notes Action Economics, and puts the index well above its three-month average of 95.9.

In stocks news, Amazon.com was upgraded to outperform from peer perform by Bear Stearns, citing the opportunity to benefit from the growth of e-commerce. The Amazon news lifted other tech shares, helping to explain why the Nasdaq was leading the other major indexes into the midday mark.

Bricks and mortar retailer Target (TGT ) corfirmed it sees December same-stores sales growing 3% to 5% as it enters the last week of December.

Starwood Hotels (HOT ) said its Sheraton hotels in southeast Asia were spared from structural damage from the massive earthquake and tidal waves that killed more than 40,000. The company added that its properties were operating close to normal.

In other stocks news, a federal regulator is reviewing the fat benefits package Fannie Mae (FNM ) is planning to pay two executives who are leaving the mortgage-finance company.

Hospital operator Universal Health Services (UHS ) lowered its 2004 profit forecast by 10 cents per share because of fewer admissions at its acute care hospitals.

Crude prices ended up, but only slightly, with NYMEX crude rising 45 cents to $41.77 a barrel after dropping more than 6% on Monday. The uptick helped to bring back buyers to oil and drilling stocks.

Market internals are clearly bullish, says Informa Global Markets, with advancing stocks ahead of decliners by nearly 2-to-1. Yet, volume remains below average in the final week of the year, with big accounts biased to hold core positions while fewer day traders make for less liquidity.

In merger news, Blockbuster (BBI ), the No. 1 U.S. video rental chain, said it may launch a hostile takeover for rival Hollywood Entertainment (HLYW )if the company does not accept its $700 million offer.

Treasury Market

Treasury prices ended mixed on Tuesday as the December consumer confidence reading was much stronger than expected and anecdotal evidence suggested that the holiday shopping season wasn't as bad as some feared, according to S&P MarketScope. Initially, there was a huge selloff after much stronger than expected consumer confidence numbers but the afternoon saw buy interest and prices ended not far from where they started.

In other economics news, the Chicago Federal Reserve Bank's index on Midwest manufacturing fell 0.3% in November to a seasonally adjusted level of 117.1 after a revised gain of 1.3% in October. The index, however, stands 2.6% above the year ago level. The modest drop in the Chicago Fed's index reflected a -1.1% decline in auto production which offset a 1% rise in steel output along with a slight gain in machinery and resource sectors.

World Markets

European stocks finished higher. The London stock market was closed.

Germany's DAX index was up 26.43 points, or 0.62%, at 4,261.79 in yearend bargain hunting. Dr. Scheller Cosmetics was higher after receiving an offer from Russia's OAO Kalina to buy 21% of its shares. HVB Group was lower after the company said it won't be easy to reach 2005 goals. Metro Group was up after saying its Christmas sales were probably were higher.

In Paris, the CAC 40 index added 7.14 points, or 0.19%, at 3,824.83. Accor and Club Mediterranee were lower on worries about losses from devastating Indian Ocean tsunamis that destroyed many vacation resorts and killed thousands.

Asian markets closed higher. Japan's Nikkei index gained 61.78 points, or 0.54%, to 11,424.13, closing at a five-month high. Market sentiment was boosted by favorable economic data, with industrial production posting the first rise in three months of 1.5% month over month growth in November. Car audio equipment maker Clarion leapt 3.85% on news that Hitachi would buy 40.7 million shares, or a 14.5% stake in the company. Sumitomo Metal Mining gained 1.82% after the company said it would build a new plant in Japan to quadruple production capacity.

In Hong Kong, the benchmark Hang Seng Index ended up 2.05 points, or 0.01%, to close at 14,196.95 as investors stayed cautious ahead of the year-end with Henderson Investment down 1.69% and China Resources down 1.28%.

Today's Headlines

The death toll from the epic tsunami that rocked 11 countries rose to 40,000 people, and food and supplies poured into the region, part of what the U.N. said would be the biggest relief effort the world has ever seen. Millions remained homeless: AP

An audiotape purportedly from Osama bin Laden suggests the al Qaeda chief has accepted Abu-Musab al-Zarqawi's offer to unite the world's most famous terror group and the bloodiest insurgency inside Iraq, national security experts say: AP