No Santa Claus Rally for Wall St.

Down Week Breaks With Tradition

The major U.S. stock market indexes yesterday finished slightly lower for the week, weighed down by more dispiriting economic news including sour results from retailers, data showing that GDP fell 0.5 percent in the third quarter, and reports that claims for new unemployment benefits jumped to a 26-year high.

The Dow fell 0.7 percent for the week while the Standard & Poor's 500-stock index fell 1.7 percent. The tech-heavy Nasdaq composite index fell 2.2 percent.

The slight declines broke with Christmas week tradition. Since 1900, the Dow has averaged a 0.7 percent rise during Christmas week, moving higher 69 percent of the time, according to research by Bespoke Investment Group. In the past decade, the increase has averaged 0.6 percent.

But this is a different kind of year. The nation is weathering what many economists call the worst economic crisis since the Great Depression. Thousands of Americans have lost their jobs. The nation's automakers are on the brink of collapse. And investors are fleeing for safer corners.

"If this is going to be a year when there won't be a Santa Claus rally, this would absolutely be it," said Mark Vitner, a senior economist with Wachovia. "We haven't had any big moves this week, which is somewhat comforting. But we've sort of been more down than up."

Slight gains yesterday were not enough to erase losses from earlier this week. The Dow closed up 47.07 points, or 0.6 percent, to close the week at 8515.55. The S&P 500 was up 4.65 points, or 0.5 percent, to 872.80. The Nasdaq was down for part of the day but finished up 5.34 points, or 0.4 percent, to 1530.24.

The markets had reasons to cheer and jeer yesterday.

In the jeering category, more economic data was released showing that retailers are not having a particularly jolly holiday season. SpendingPulse, a division of MasterCard Advisors, said preliminary data showed that retail sales this holiday season fell 2 to 4 percent compared with last year. Electronics and appliances: Down 26 percent. Women's clothing: Down 23 percent. Men's clothing: Down 14 percent. But the stock market took these figures in stride, having already priced in much of the bad news.

"People knew this holiday season was going to be a bust," Vitner said.

Retail stocks had a mixed day. Some big department stores fell. Dillard's was down 5 percent, to $3.44. Saks fell 1.8 percent, to $3.82. And Macy's also fell -- 2.5 percent, to $8.60. There were a couple of bright spots. Jones Apparel Group soared 44.5 percent, to $5.62, after investors were encouraged the company announced it was reducing its credit line.

Amazon also closed higher, rising 0.7 percent, to $51.78, after the online retailer told investors it recorded its best holiday season ever.

The market found a rare reason to cheer the automakers following Christmas Eve news that the Federal Reserve approved GMAC's conversion to a bank holding company. The move means GMAC, which provides funding for most of General Motors' dealers and many car buyers, is eligible to receive money from the government's $700 billion bailout program.

Shares of General Motors jumped 12.6 percent, closing at $3.66. Ford was not far behind, with its shares climbing 8.5 percent to finish the day at $2.29.

Walter V. Gerasimowicz, chief executive of New York-based Meditron Asset Management, which manages more than $1 billion in assets, said the stock gains for automakers was "a definite surprise to me."

"I think that's an overreaction on a thin trading day, so to speak," he added. "I think it's far too optimistic. Just because GMAC got a lifeline doesn't mean the overriding issues are anywhere near to being solved."