By Elizabeth Stanton Nov. 28 (Bloomberg) -- U.S. stocks gained, capping the biggest weekly advance for the Standard & Poor’s 500 Index in 34 years, on speculation that government bailouts will shore up the economy. Citigroup Inc., which had $306 billion in troubled assets guaranteed by the government last weekend, rallied 18 percent for its fourth straight gain. General Motors Corp. climbed 8.9 percent and Ford Motor Co. surged 25 percent as the automakers considered cutting debt and labor costs to win federal aid. Target Corp. slumped 3.9 percent as retailers extended discounts to lure shoppers amid what is forecast to be the slowest holiday shopping season in six years. “It’s going to be a really tough Christmas shopping season, but a lot of this is built into the stocks, and there is huge stimulus coming down the pipeline,” Alan Gayle, senior investment strategist at Ridgeworth Capital Management in Richmond, Virginia, said on Bloomberg Television. “We are cautiously bullish.” Ridgeworth manages $70 billion. The S&P 500 climbed for a fifth day, adding 1 percent to 896.24 to complete its longest streak of gains since July 2007. The Dow Jones Industrial Average rallied 102.43 points, or 1.2 percent, to 8,829.04, while the Nasdaq Composite Index increased 0.2 percent to 1,535.57. Almost two stocks rose for each that fell on the New York Stock Exchange. Best Week Since ‘74 The S&P 500 surged more than 12 percent this week, its best weekly performance since 1974, as the Federal Reserve committed as much as $800 billion to help resuscitate lending markets and investors speculated President-elect Barack Obama’s economic team will bolster growth. Obama said Nov. 26 that he will implement plans to shore up the economy on “day one” of his presidency. About 787 million shares changed hands on the NYSE in the slowest trading session of the year. U.S. exchanges were shut yesterday for the Thanksgiving holiday and closed at 1 p.m. today. The S&P 500 has rebounded 19 percent from an 11-year low last week. It is still down 43 percent from its October 2007 record as credit-related losses and writedowns at global financial companies approach $1 trillion. It fell 7.5 percent in November following a 17 percent slide in October that was the biggest monthly drop in 21 years. The main benchmark for American equities has dropped in nine of the past 12 months. This week’s rally in U.S. stocks helped push the MSCI World Index of 23 developed markets up 12 percent since Nov. 21, the steepest weekly advance since data began in 1970. Europe’s Rally Europe’s benchmark index advanced for a fifth straight day, rallying 13 capping to cap the Dow Jones Stoxx 600 Index’s best week on record. Citigroup rose the most in the Dow average, climbing $1.24 to $8.29. The shares have rebounded 120 percent since closing at a 15-year low of $3.77 on Nov. 21. Bank of America Corp. advanced 5.3 percent to $16.25, while JPMorgan Chase & Co. rose 3.4 percent to $31.66. The S&P 500 Financials Index rallied 2.9 percent for the biggest advance among 10 industries. The group has rebounded 36 percent since reaching a 13-year low on Nov. 20, trimming its 2008 loss to 56 percent. General Motors and Ford advanced as GM studied whether to shed brands to save money as the industry seeks federal aid to avert bankruptcy. GM, the largest U.S. automaker, rose 43 cents to $5.24, the highest since Nov. 5. Ford climbed 54 cents to $2.69, the highest since Oct. 7. People familiar with the matter said GM may get rid of its Saturn, Saab and Pontiac brands in addition to Hummer. GM’s other U.S. brands are Chevrolet, GMC, Buick and Cadillac. Auto Bailout The company faces a Dec. 2 deadline to give Congress a survival plan showing it can repay federal aid. Congress has scheduled a Dec. 5 hearing on a $25 billion auto-industry rescue and may vote the week of Dec. 8. Obama yesterday said the U.S. faces a “time of great trial” and an economic recovery won’t come from “policies and plans alone.” “It will take the hard work, innovation, service and strength of the American people” to end the financial crisis, he said yesterday in his weekly radio address. Stocks also advanced as yields on Treasury securities declined to record lows, limiting the risk-free return available to investors who lend money to the U.S. government. The benchmark 10-year note’s yield touched 2.91 percent. The dividend yield on the S&P 500, which averaged 1.5 percent from 1997 through 2007, is about 3.4 percent, up from 2 percent at the end of last year. Crude Slumps Hess Corp., the fifth-largest U.S. oil company, lost $2.17 to $54.04 as the national average price for unleaded gasoline extended its decline, falling to $1.84 a gallon, the lowest since January 2005. Declining prices have yet to lift demand for gasoline, which slid 1.3 percent from last week, the Energy Department said in its weekly report. Exxon Mobil Corp. and ConocoPhillips were the biggest drags on the S&P 500. Crude traded near the lowest since May 2005 even as OPEC members may consider a reduction at their meeting this weekend in Cairo to stabilize the market. Energy companies in the S&P 500 fell 1.5 percent, the most among its 10 main industry groups. Chesapeake Energy Corp. slumped 15 percent to $17.18 for the biggest drop in the index. The second-largest independent U.S. producer of natural gas said it will seek to raise about $2 billion to finance projects and acquisitions by selling stock, spurring concern that earnings will be diluted on a per-share basis. Tech, Consumer Concern Intel Corp., whose chips run more than three-quarters of the world’s computers, lost 17 cents to $13.80 after European rival STMicroelectronics NV cut its sales forecast because of weakening demand. STMicroelectronics said fourth-quarter sales will be $2.2 billion to $2.35 billion, down 13 percent to 18 percent from $2.7 billion in the previous quarter. The company had predicted sales being unchanged or falling 8 percent. Consumer electronics companies ranging from Nokia Oyj, STMicroelectronics’ biggest customer, to Panasonic Corp. have slashed their forecasts this month as consumers buy fewer mobile-phones, flat-panel televisions and computers. Target, the second-largest U.S. discount retailer, fell $1.37 to $33.76. Tiffany & Co., the world’s second-biggest luxury-jewelry retailer, lost 5.4 percent to $19.79. Amazon.com Inc., the world’s biggest Internet retailer, declined 2.9 percent to $42.70. Wal-Mart Stores Inc., the world’s largest retailer, decreased 81 cents to $55.88. Slower Spending Individuals may spend an average of $616 on holiday gifts this year, down 29 percent from a year earlier, according to a Gallup Inc. poll. November and December sales at stores open at least a year may rise 1 percent, the smallest gain since 2002, according to the International Council of Shopping Centers, a New York-based trade group. Retailers promoted “doorbuster” deals to attract customers today, the day traditionally called “Black Friday.” The day after Thanksgiving is considered to be when retailers start to make their annual profit, having paid off their costs from sales earlier in the year. To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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