NEW YORK – The stock market shifted back into rally mode Friday after analyst upgrades boosted investor optimism about the economy.
A 36-point advance in the Dow Jones industrial average left the index at a new high for the year and with a gain of 215 points for the week, its best weekly performance since July. Stock indexes have risen on nine of the past 11 days.
The market got a boost from a new economic forecast at Barclay’s Capital, which raised its projection for growth in the nation’s gross domestic product for first three months of next year to 5 percent from 3 percent. GDP has been shrinking, although many economists think it will return to growth for the July-September quarter.
The market’s climb came a day after a pullback that did little to quiet analysts’ calls for a break in the market’s run.
Marc Harris, co-head of global research for RBC Capital Markets in New York, said the strength of the rally has surprised many investors because some of the stocks posting the biggest advances are lower-quality companies with weak balance sheets that investors only months ago feared might go out of business.
Financial companies and home builders have been among the biggest gainers in the recent run. Many of these companies still face major hurdles with bad debt and the weak housing market.
Many analysts expect the market’s run will slow – but perhaps not stop – as investors shift their holdings from industries where the gains have been strong, like technology, to areas that have lagged.
The Dow Jones industrial average closed the week up 214.79, or 2.2 percent, at 9,802.20. The Standard & Poor’s 500 index rose 25.57, or 2.5 percent, to 1,068.30. The Nasdaq composite index rose 51.96, or 2.5 percent, to 2,132.86.
The Russell 2000 index, which tracks the performance of small company stocks, rose 24.29, or 4.1 percent, for the week to 617.88.
The Dow Jones U.S. Total Stock Market Index – which measures nearly all U.S.-based companies – ended at 11,032.18, up 279.89, or 2.6 percent.