Stocks Start the New Year with a Robust Rally
"Rallies earlier in the day in Asia and Europe on back of manufacturing growth in China . . . along with better-than-expected strength in Stateside manufacturing helped stocks move higher today," says Ticonderoga Securities analyst John Stoltzfus.
Among Dow components, the manufacturing data was particularly helpful to Alcoa (AA), Boeing (BA) and United Technologies (UTX), each of which rose at least 4% at one point during the session. At the sector level, basic materials, energy and financial stocks were the top performers, while the defensive sectors of utilities and consumer staples lagged.
The dollar reversed its December trend to finish lower, as the U.S. Dollar Index, which measures the greenback against a basket of major currencies, dropped 37 cents to $77.50. That helped lift shares of assets denominated in dollars. Oil rose rose $2.17 to close at $81.53 a barrel, while gold gained $22.9 to $1,119.10 an ounce. Meanwhile, frigid weather across a wide swath of the U.S. helped natural glass climb 30 cents to $5.83 per million British thermal units
Monday's strong equity gains came despite a disappointing reading on construction projects, which posted its seventh straight monthly decline. Construction spending fell 0.6% in November, the U.S. Commerce Department said Monday. Economists were looking for a 0.5% drop, according to a survey by Bloomberg News.
Shares also benefited from a weekend speech from Federal Reserve Chairman Ben Bernanke in which he said low interest rates didn't cause the housing bubble, and he downplayed the possibility of a rate hike in early part of 2010.