S&P 500 up for the year as stock market rises solidly

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The S&P 500 might enjoy a merry Christmas after all.

The blue-chip index turned positive for the year this morning, thanks to a recently steady stream of encouraging economic data and the breaking of the congressional deadlock over the extension of the payroll tax cut.

The index is up about 0.6% today, enough to notch a gain of 0.4% for the year.

It’s too soon, of course, to say the stock market has turned any kind of a permanent corner and is headed even higher. Stocks are no doubt getting a boost from light trading volume in the holiday week when the tilt of economic news can have an outsized effect on the direction of the market.

But it’s encouraging that stocks appear to be ending the year strongly. The market has historically fared well in the third year of a presidential election cycle, and the S&P’s underwhelming performance had raised concerns about its prospects in 2012.

One obstacle the market might have to confront in the new year: the percentage of S&P 500 companies pre-announcing positive fourth-quarter earnings in the past couple of weeks dropped below 60% for the first time since early 2009.

Thus far, just 57% of companies pre-announced better-than-expected fourth-quarter earnings, according to FactSet Research Systems. That’s the first time since the 59% mark in the first quarter of 2009 that the percentage has dropped below 60%.

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-- Walter Hamilton