Market Snapshot November 30, 2009, 4:45PM EST

Stocks Edge Higher amid Dubai, Data

On Monday, traders also focused on reports that the U.S. holiday shopping season got off to a disappointing start

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U.S. stock indexes edged higher Monday in a seesaw session that reflected investors' moves to revise their portfolios on the last day of November.

Some market observers were encouraged that equity indexes were not tanking in reaction to uncertainty whether United Arab Emirates central banks will bail out Dubai World from its debt problems, says S&P MarketScope.

Also Monday, the Chicago purchasing managers' index (PMI) rose to 56.1 in November, after climbing to a 13-month high at 54.2 in October, as the pace of expansion accelerated.

Meanwhile, U.S. holiday store sales appeared to come in below expectations in the first weekend of the season.

On Monday, the 30-stock Dow Jones industrial average rose 34.92 points, or 0.34%, to 10,344.84. The broad Standard & Poor's 500-stock index was up 4.14 points, or 0.38%, to 1,095.63. The tech-heavy Nasdaq composite index gained 6.16 points, or 0.29%, to 2,144.60.

Despite gains since March, major U.S. stock indexes are on track to close the decade lower for the first time in 90 years, notes S&P.

The market was bracing for Tuesday's reports on the November ISM manufacturing index, which was expected at 56.0, near the 55.7 reading the prior month; and October construction spending, whic is seen falling 0.8% after rising 0.8% the month before.

The week's data highlight is Friday's U.S. employment report, with nonfarm payrolls expected to fall by 125,000 while the unemployment rate holds at 10.2%.

Treasuries were mixed as stocks fluctuated. The U.S. dollar index was lower. Gold futures rose $5.10 to $1,179.30. Oil futures moved up $1.24 to $77.29.

"While the markets are a bit calmer today as fuller liquidity returns, trading conditions are still choppy and nervous with month-end factors also likely to influence trading," wrote Brown Brothers Harriman stragtegist Meg Browne in a note Monday.

The United Arab Emirates' central bank eased credit for lenders and said it "stands behind" the country's local and foreign banks as they face the prospect of rising losses from Dubai World's possible default. Dubai World, a state-owned holding company struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a standstill agreement with creditors and an extension of loan maturities until at least May 30, 2010. Banks will be able to borrow money from the regulator for half a percentage point above the three-month local benchmark interest rate, the Abu Dhabi-based Central Bank of the UAE said in an e-mailed statement yesterday. "This is a timely pre-emptive move from the central bank," Ahmet Akarli, an economist at Goldman Sachs Group in London, said in a note. The central bank is "ensuring that local markets are operational" and banks "have access to ample liquidity."

Early Monday, investors seemed to believe that the crisis would be contained. The director general of the Dubai Department of Finance, Abdulrahman al-Saleh, said market reaction to Dubai World's announcement was exaggerated and did not match the extent of the company's woes. "I think banks are not at a stage where they need any extra liquidity from the central bank," he said on Dubai TV, Reuters reported from Dubai. "Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the government, which is not correct."

Dubai World's debt is not guaranteed by the government, al-Saleh also said. "The company received financing based on its project schedule, not a government guarantee," al-Saleh said in response to whether the government was backing the debt. "The lenders should be part of the responsibility."