Merry market advances on Merrill Lynch stake

NEW YORK — Wall Street advanced sharply today, boosted by news that Merrill Lynch will receive an investment of up to $6.2 billion from two investment groups.

The Dow Jones industrial average rose 98.68 to 13,549.33.

Microsoft, one of the 30 Dow stocks, advanced 52 cents to close at $36.58 a share. Boeing, also a Dow stock, gained 95 cents to $90.02.

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

Trading volume was light in today'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 nation's largest brokerage also said it would sell most of its commercial finance unit to GE Capital. Terms of the deal weren't made public.

"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."

Today'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.

Bond prices fell today. 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. The dollar was mixed against other major currencies, while gold prices rose.

The stock market closed three hours early at 1 p.m. EST, while the bond market was closing at 2 p.m.

Light, sweet crude rose 32 cents to $93.63 on the New York Mercantile Exchange.

Merrill Lynch fell $1.64, 3 percent, to $53.90 after selling a stake in itself to strengthen its balance sheet. It joins a number of other global banks — including Citigroup, UBS, and Morgan Stanley — to secure a capital infusion to diffuse losses from the credit crisis.

The nation's largest brokerage also sold most of its commercial finance unit to GE Capital. Merrill Lynch Chief Executive John Thain, who took over the position last month, has said he plans to use asset sales to help streamline the company.

Advancing issues led decliners by a 3-to-1 basis on the New York Stock Exchange, where volume came to a light 420.8 million.