Stocks gain after Merrill gets $6.2B investment

Monday’s gains have
investors hoping for a Santa Claus rally.

NEW YORK (AP) — Wall Street advanced sharply Monday, boosted by news that Merrill Lynch & Co. will receive an investment of up to $6.2 billion from two investment groups. The Dow Jones industrial average rose nearly 100 points.

Trading volume was light in Monday’s abbreviated session — a typical occurrence a day ahead of Christmas. Still, with only five trading days remaining in 2007, investors were perhaps looking for any opportunity to tidy up their positions after a year that brought the return of volatility after several years of unusual calm.

Merrill Lynch provided the only significant news of the day. The investment firm said it was receiving a widely expected cash infusion from Singapore’s government-controlled investment fund, Temasek Holdings, and U.S.-based Davis Selected Advisers. The proceeds were expected to cushion Merrill’s mortgage-related writedowns for the fourth quarter.

“The market is tacking on strong gains from Friday, a last-minute Santa Claus rally,” said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners. “The Merrill Lynch investment adds to stability in the market. I look at it as a vote of confidence on the part of foreign investors.”

Monday’s gains have some investors hoping for a so-called Santa Claus rally — a year-end surge that often extends into the new year and can burnish portfolios. On Friday, the Dow rose more than 200 points and, along with the other major indexes, posted a gain of more than 1.5 percent for the session.

According to preliminary calculations, the Dow rose 98.68, or 0.73 percent, to 13,549.33.

Broader market indexes also advanced. The Standard & Poor’s 500 index added 11.99, or 0.81 percent, to 1,496.45; and the Nasdaq composite index rose 21.51, or 0.80 percent, to 2,713.50.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.21 percent from 4.17 percent late Friday.