Investors weigh Tuesday's rally

NEW YORK » Stocks rose moderately yesterday as investors digested Tuesday's gains, which followed the Federal Reserve's signal that it may be nearing the end of its streak of short-term interest rate hikes.

Tuesday's rally "seemed to take people by surprise," said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore.

Retail sales reports, rising oil prices and mixed economic news capped the day's gains.

"The last week of the year is coming in pretty lame" for retailers, said Jack A. Ablin, chief investment officer at Harris Private Bank in Chicago. A third month of disappointing sales from American automakers added to the sense that consumer spending may be slowing.

Crude oil futures crossed $63 a barrel, further cooling investor enthusiasm. A barrel of light sweet crude settled at $63.42, up 28 cents in trading on the New York Mercantile Exchange.

The Dow Jones industrial average rose 32.74, or 0.3 percent, to 10,880.15. The Dow rose 129.91, or 1.21 percent, on Tuesday.

Broader stock indicators were higher. The Standard & Poor's 500 index rose 4.66, or 0.37 percent, to 1,273.46. The tiny gain was enough to send the index to a four-and-a-half year high. The Nasdaq composite index rose 19.72, or 0.88 percent, to 2,263.46, reflecting a $10.01 jump in Google Inc. after Bear Stearns upgraded the stock.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.35 percent from 4.37 percent late Tuesday. The U.S. dollar was lower against other major currencies. Gold prices were higher.

Investors remain uncertain about the transfer of power at the Federal Reserve, as Alan Greenspan retires and Ben Bernanke takes his place.

"It's like we're all waiting for something to start," said Frank Gannon, senior equity portfolio manager, AIG SunAmerica Mutual Funds.

The day's scant economic news was mixed. While November orders to U.S. factories posted their biggest gain in three months, the increase came entirely from higher demand for commercial aircraft. Without transportation, orders were essentially unchanged, the fourth month of the past five that this broad category of the economy's health has either fallen or shown no growth.

Traders are quietly cheering for a minor economic slowdown, in the hopes that it will bring a quicker end to the Federal Reserve's interest rate hikes. The Fed has raised short-term interest rates 13 straight times in the past year and a half.