Hoping for something better than 2011’s flat stock market,US investors pushed shares higher Tuesday to begin the new year,though questions remain about whether a rally can be sustained.
The broad S&P 500 index closed at its highest since late October as traders,with cash on hand for the new year,welcomed better-than-expected German and Chinese economic data.
The upbeat response was reinforced by US economic reports showing construction spending and factory activity beat economists’ forecasts.
There were some good economic numbers from outside the US,and people have cash to invest for the new year so that’s driving up prices,said Giri Cherukuri,head trader at OakBrook Investments in Lisle,Illinois. It’s a good start but we’ll have to wait and see for the trend.
Trading volume was below normal. About 7 billion shares changed hands on the New York Stock Exchange,the Nasdaq and Amex,compared with last year’s daily average of about 7.84 billion shares.
Advancers led decliners on the New York Stock Exchange by more than 16 to 5 and by about 14 to 5 on the Nasdaq.
Materials companies and financials,the lagging sectors in 2011,were among Tuesday’s market leaders with the KBW bank index up 3.3 per cent. US Steel gained 6.5 per cent to $28.17 after losing more than half its market value in 2011.
Strategists polled by Reuters in December expect the benchmark S&P 500 index to finish 2012 at 1,340 for a yearly gain of 6.6 per cent. That compares with the S&P’s mere 0.003 per cent slip in 2011.
Data showed US manufacturing sector growth accelerated in December at its strongest pace since June,while construction spending in November surged to the highest in nearly 18 months.
Some of the S&P 500’s worst performers last year rallied on Tuesday. But at the same time,McDonald’s Corp,the biggest gainer in 2011 among Dow components,fell 1.5 per cent to $98.84.
First Solar,down 74 per cent in 2011,jumped 6 per cent to $35.79 and Netflix,off more than 60 per cent last year,added 4.3 per cent to $72.24.
The Dow Jones industrial average rose 179.82 points,or 1.47 per cent,to 12,397.38. The S&P 500 Index added 19.46 points,or 1.55 per cent,to 1,277.06. The Nasdaq Composite gained 43.57 points,or 1.67 per cent,to 2,648.72.
The market’s rise was foreshadowed by a large jump in stock index futures after weekend data showed China,the world’s largest consumer of metals,avoided economic contraction in December.
Also boosting investors’ mood was German unemployment,which declined more than forecast.
Indexes held on to gains after minutes from last month’s Federal Reserve meeting said a number of Fed officials believed economic conditions could well warrant a further easing of monetary policy.
Among declinging stocks,Exelon Corp fell 3 per cent to $42.07 after a downgrade from Macquarie and other utility shares also lost ground as natural gas futures hit their lowest intraday price since September 2009.
S&P utilities,the best performers last year among the top ten sectors on the S&P 500,fell 1.7 per cent.