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Stocks Rally into the New Year

Published: January 3, 2012 | 3:38 pm
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U.S. stocks opened the first trading day of 2012 with a bang, as investors welcome stronger manufacturing reports out of emerging economies.

The Dow Jones industrial average (INDU) jumped 230.46 points, or 1.9%, in early trading. The S&P 500 (SPX) gained 23 points, or 1.8%. The Nasdaq (COMP) added 54 points, or 2%.

Bank stocks, which were among the worst performing sectors last year, led the Dow higher. Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and JPMorgan (JPM, Fortune 500) all posted strong gains in the early going.

U.S. markets were closed for the New Year holiday on January 2.

“There’s an element of catch-up for the U.S.,” said David Jones, chief market strategist at IG Index. “Probably more importantly, we’ve had some strong manufacturing data out for China and India that was better than expected.”

Over the weekend, the Chinese government released its official reading on manufacturing activity, showing the sector expanded slightly in December, after contracting the month before. And on January 2, a report compiled by HSBC and Markit showed India’s manufacturing activity picked up significantly during the month.

Investors worldwide are tuning in closely to economic numbers out of China in particular, because its rapid growth has led the global recovery — but recent figures have shown some signs of weakness.

Meanwhile, oil prices surged nearly 3% on continued anxiety over Iran’s growing threat to shut down the Strait of Hormuz.

Stocks in 2012: Choppy but higher

U.S. stocks finished little changed on December 29, bringing to an end a year in which the S&P dropped just 0.04 point — the smallest annual change in history.

The Dow rose 5.5% for the year, while the Nasdaq lost 1.8%.

Economy: The December installment of the ISM Manufacturing Index, due after the market open, is expected to rise to 53.4 from 52.7 in November, according to a consensus of economists surveyed by Briefing.com. Any reading above 50 signals expansion in the sector.

Companies: Chesapeake Energy (CHK, Fortune 500) shares rose after the Oklahoma City-based energy company announced it completed a venture with an affiliate of French oil company Total (TTFNF) that gives the French firm a 25% stake in more than 600,000 acres in eastern Ohio, an area rich in shale oil.

Mead Johnson Nutrition (MJN) shares gained after two U.S. government agencies said they have completed their investigation of Enfamil and found the baby formula safe to use. The Food and Drug Administration and the Centers for Disease Control and Prevention had stepped in after a newborn baby died of a rare bacterial infection that they suspected could be linked to the powder-based infant formula.

World markets: European stocks were mixed in afternoon trading. Britain’s FTSE 100 (UKX) rose 1.3%, the DAX (DAX) in Germany added 1% and France’s CAC 40 (CAC40) lost 0.7%.

The Hang Seng (HSI) in Hong Kong added 2.4%. Markets in Shanghai (SHCOMP) and Tokyo (N225) were both closed for an extended New Year holiday.

Currencies and commodities: The dollar fell against the euro, the British pound and the Japanese yen.

Oil for February delivery added $3.02, or 3%, to $101.85 a barrel.

Gold futures for February delivery rose $27.40 to $1,594.20 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.95% from 1.87% late December 29.

Source: CNNMoney


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