US STOCKS-Wall St rises as earnings, M&A heighten optimism

* Adobe Systems rises on solid forecast

* Massey Energy jumps on deal talk

* Indexes up: Dow 0.5 pct, S&P 0.6 pct, Nasdaq 0.7 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Adds volume)

By Leah Schnurr

NEW YORK, Dec 21 (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) rose on Tuesday as
solid earnings and a flurry of merger activity underpinned a
steady upward trend that reinforced investor optimism for the
coming year.

The S&P 500’s close is on the cusp of closing levels not
seen since before Lehman Brothers collapsed in September 2008,
an important psychological barrier for investors at 1,255.08.

Financials led the way higher, continuing their December
rally after underperforming the broader market for much of the
year. The KBW bank index (.BKX: ) jumped 1.9 percent.

Fund managers have been reallocating cash to equities from
fixed income and reduced cash positions.

“We’ve been putting risk at work for some period of time
and we think people will continue to regret holding too much
cash and being too conservatively positioned,” said Bob Browne,
chief investment officer at Northern Trust in Chicago.

Northern Trust, which has $657 billion in assets under
management, recently reduced its cash allocation and increased
investments in U.S. large cap equities and fixed income.

“If you take a balanced view of the positives and the
negatives short term and long run, we think it gets you to an
overweight position in equities,” said Browne.

Adobe Systems Inc (ADBE.O: ) jumped 6 percent to $30.93 after
it gave an upbeat forecast, while coal miner Massey Energy Co
(MEE.N: ) rose on expectations the company was lining up
potential buyers. Massey gained 1.2 percent to $52.45. For
details, see [ID:nN20202319] [ID:nSGE6BK03Z]

The Dow Jones industrial average (.DJI: ) added 55.03 points,
or 0.48 percent, to 11,533.16. The Standard & Poor’s 500 Index
(.SPX: ) gained 7.52 points, or 0.60 percent, to 1,254.60. The
Nasdaq Composite Index (.IXIC: ) rose 18.05 points, or 0.68
percent, to 2,667.61.

The S&P 500 notched another two-year high. The index has
rallied 6.3 percent for the month and is up 12.5 percent for
the year.
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For a graph on the performance of the S&P 500 since the
collapse of Lehman Brothers click: http://r.reuters.com/vev23r
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The S&P 500, which has gained in each of the last three
weeks, broke through the 61.8 percent Fibonacci retracement of
the 2007-2009 bear market slide earlier this month.

Technicians said the next stop is the 76.4 percent
retracement at 1,362. The exponential Relative Strength Index
(RSI), though, suggests the S&P may be overbought in the short
term. The RSI provides a measure of higher closes to lower
closes over a given trading period and is closely watched by
traders.

Elsewhere on the earnings front, electronics manufacturer
Jabil Circuit Inc (JBL.N: ) surged 10.7 percent to $19.55 after
it reported better-than-expected quarterly profit and forecast
a robust second quarter. [ID:nSGE6BJ0CV]

American International Group Inc (AIG.N: ) gained 3.3 percent
to $55.18 after officials briefed on the situation told Reuters
the U.S. government plans to sell a large piece of its stake in
the company in two stock offerings next year. [ID:nN21252238]

In other individual movers, Martek Biosciences Corp
(MATK.O: ) spiked up 35.6 percent at $31.67 after Dutch group DSM
(DSMN.AS: ), the world’s largest vitamins maker, agreed to buy
the maker of U.S. baby food ingredients. [ID:nLDE6BK04U]

About 6.26 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, well below
last year’s estimated daily average of 9.65 billion. Volume is
expected to be light throughout the holiday shortened week.

Advancing stocks outnumbered declining ones on the NYSE by
2,078 to 945, while on the Nasdaq, advancers beat decliners
1,928 to 730.
(Additional reporting by Rodrigo Campos, Editing by Chizu
Nomiyama)

US STOCKS-Wall St rises as earnings, M&A heighten optimism