Santa rally? Stocks end day sharply higherBy msnbc.com staff and news services

Investors' ongoing mixed feelings about Europe’s debt woes seemed to turn optimistic Tuesday as stocks rallied from the opening bell. The Dow ended the day back over 12,000 for the first time in nearly two weeks and the major indexes all rose more than 2.5 percent.

According to preliminary calculations, the Dow Jones industrial average closed up 335.73 points, or 2.85 percent, to 12,101.99. The last time the Dow closed above 12,000 was Dec. 12. The S&P 500 rose 35.87, or 2.98 percent, to 1,241.22. The Nasdaq was 80.59 higher, or 3.19 percent, to 2,603.73.

At the close, CNBC called the day the best for stocks in a month.

A jump in apartment building also seemed to help the market. The Commerce Department said builders broke ground on 685,000 new homes last month, a 9.3 percent jump from October. That's the highest level since April 2010. Building permits, a gauge of future construction, increased 5.7 percent, spurred by a jump in apartment permits.

German business and consumer confidence rose unexpectedly in December, and the Spanish government pulled off a successful debt auction. Both helped to ease worries about Europe's debt crisis.

Borrowing costs for the Spanish government plunged at an auction of short-term debt, a sign that investors are becoming more confident in the country's ability to pay it back.

"Spain has plenty of problems, large debts and budget deficits," said Sam Stovall, chief equity strategist at S&P Capital IQ. "So when we see debt auctions go much better than expected it's very encouraging."
Spain raised €5.6 billion ($7.3 billion), much more than its goal of €4.5 billion. Investors demanded an interest rate of only 1.74 percent to lend to the government for three months, a steep fall from the 5.1 percent at an auction in November.

Analysts cautioned that other big rallies in the stock market have been quick to fade as traders move quickly to get out of stocks and keep more money in cash. "If you're selling into rallies, it means people want out. They don't believe it's sustainable," said Quincy Krosby, Prudential Financial's market strategist.

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