* Wall St starts 2009 with gains
* Market shrugs off dire factory data
* Analysts watch for more signs of Obama stimulus plan
* Major indexes up about 1.4 percent
* For up to the minute market news, please click on
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NEW YORK, Jan 2 (Reuters) - U.S. stocks started 2009 by
extending their recent rally to a two-week high on Friday on
hopes that the worst of the market rout was over, and General
Motors Corp. jumped 10 percent after a rescue loan from the
government.
After stock markets suffered their worst year since the
1930s on fears of a long and deep recession, market analysts
were looking ahead to how the next U.S. administration might
try to kickstart the economy.
"Today we're seeing some New Year optimism even though
volumes are thin," said Andre Bakhos, president of Princeton
Financial Group in Princeton, New Jersey.
"People are looking at valuations as we approach earnings
season, putting some money to work in situations that by
historical standards would be deemed compelling," he said,
noting recent record low yields for government bonds.
At 11:15 a.m. (1615 GMT), the Dow Jones industrial average
<> was up 125.21 points, or 1.43 percent, at 8,901.60. The
Standard & Poor's 500 Index <.SPX> was up 11.95 points, or 1.32
percent, at 915.20. The Nasdaq Composite Index <> was up
22.39 points, or 1.42 percent, at 1,599.42.
Leading share indices turned negative briefly around the
time the Institute for Supply Management said U.S. factory
activity fell to a 28-year low in December, showing a more
severe contraction in the sector than economists had expected.
But stocks moved higher soon after.
Two of the stocks that defied the slump in 2008 were among
the strongest blue-chip risers on Friday. Fast-food chain
McDonald's Corp <MCD.N> rose 1.8 percent to $63.28 and low-cost
retailer Wal-Mart Stores Inc <WMT.N> gained 2.2 percent to
$57.30.
Both stocks are considered resilient to recession, given
their appeal to consumers seeking to spend less.
Analysts said investors were watching closely for more
signs of how President-elect Barack Obama will try to jolt the
U.S. economy out of its worst slump in decades.
"It is pretty shocking, about what happened (in 2008), but
you have put that behind you and figure out where the economy
and business is going next," said Kim Caughey, senior equity
research analyst at Fort Pitt Capital Group in Pittsburgh.
Obama is due to meet leaders in Congress on Monday to
discuss his stimulus plan.
Some Republicans are worried that their Democratic rivals
could expand the plan to as much as $1 trillion.
U.S. stocks also rose on Tuesday and Wednesday, before the
Jan. 1 holiday, taking the Dow's recovery since touching an
11-year low on Nov. 20 to nearly 22 percent and adding to hopes
that the the worst of the stock market rout could be over.
In 2008 as a whole, the Dow fell 33.8 percent, for its
bleakest year since 1931; the S&P skidded 38.5 percent; and the
Nasdaq posted its worst year ever, with a 40.5 percent drop.
But Caughey of Fort Pitt Capital warned that more bad news
was expected from corporate earnings, possibly through the
second quarter.
The market on Friday could be helped by the end of selling
pressure that typically occurs in December as investors seek to
offset losses under U.S. tax rules, she said.
GM shares were up 10.3 percent after the U.S. government on
Wednesday paid out the first $4 billion in emergency loans to
support the biggest U.S. carmaker. A parallel rescue payment
for Chrysler LLC was on hold until the new year.
Chrysler said it remained in talks with the U.S. Treasury
to finalize its own $4 billion loan agreement and expected to
receive its share of the funding soon.
(Editing by Tom Hals)
