Markets drift up; Dow leads the way

NEW YORK - Better holiday sales and rising commodities prices pushed stocks yesterday to their sixth straight gain and a 14-month high for the Dow industrials.

Major indexes edged higher in light trading after sales figures showed shoppers spent more freely this holiday season than they did last year, a sign consumers are feeling better about the economy.

Consumer spending is one of the biggest drivers of economic growth and is important for a sustained recovery.

Meanwhile, commodities prices rose as the dollar fell, giving a boost to energy and materials stocks.

Airline stocks fell, restraining the market's gains, after two security incidents on Northwest flights this weekend. The Dow transportation average fell 0.6 percent.

With fewer traders in the market due to the holidays, and without any bad news, analysts said stock prices were likely to drift higher during the final days of 2009.

"What's going to stop this is a question on a lot of people's minds," said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors. "And the answer so far is nothing."

The Dow Jones industrial average rose 26.98, or 0.3 percent, to 10,547.08, its highest close since Oct. 1, 2008. The Dow transportation average fell 24.37, or 0.6 percent, to 4,163.49.

The Standard & Poor's 500 index rose 1.30, or 0.1 percent, to 1,127.78; the Nasdaq composite index rose 5.39, or 0.2 percent, to 2,291.08.

Bond prices came off their lows after an auction of $44 billion of two-year notes saw sufficient demand. Bond prices have been falling in recent weeks, pushing yields higher as stocks continue to advance amid improving economic data. In total, the Treasury Department is issuing $118 billion of debt this week.

The yield on the previously auctioned 10-year Treasury note, which moves opposite its price, rose to 3.85 percent from 3.80 percent Thursday.

Stocks have managed to grind higher throughout December, but the gains have been more subdued than in recent months as investors have held back on making big moves going into the end of the year. The S&P 500 index is up 66.7 percent since hitting a 12-year low in March.

Commodities prices rose as the dollar fell. Commodities are priced in U.S. dollars, so when the greenback is weak they become more attractive to foreign buyers.

Shares of Delta Air Lines Inc., which owns Northwest, fell 48 cents, or 4.1 percent, to $11.29. A failed attack on a Northwest flight on Christmas Day and another incident on the same route to Detroit from Amsterdam on Sunday raised security concerns.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where volume came to a light 705.4 million shares. The Russell 2000 index of smaller companies fell 0.32, or less than 0.1 percent, to 633.75.