Stocks kicked off December with a rally Tuesday as fears about the Dubai situation subsided but pared their gains after a lower-than-expected reading on manufacturing.
The Dow was up less than 90 points, after being up more than 100 earlier. Most Dow components advanced, except for JPMorgan and American Express — two of the best performers in Monday's session.
Stocks held their gains after a flood of economic numbers: The ISM reported its gauge of manufacturing activity slipped to 53.6 in November from 55.7 in October, missing expectations but still in growth mode. Anything over 50 represents expansion. Pending-home sales rose 3.7 percent to their highest level in 2 1/2 years and construction spending was unchanged — both for October.
This came after stocks pulled off a modest gain Monday, with the Dow up 0.3 percent and closing the month up 6.5 percent.
Global markets seemed assuaged by Dubai's restructuring plans, with most major indexes in Europe and Asia up more than 1 percent.
In China, a pair of business surveys showed the economy is ending the year on a strong note, laying the groundwork for solid expansion in 2010.
The dollar retreated against most major currencies, and both oil and gold rose — gold neared $1,200 an ounce.
The big buzz in the U.S. markets today is that General Electric has agreed to pay Vivendi $5.8 billion for its 20 percent stake in CNBC parent NBC Universal, clearing the path for a proposed deal to give Comcast a 51 percent stake in NBCU.
Plus, online-shopping sites reported a surge in sales on "Cyber Monday," a day that isn't typically one of the biggest online-shopping days of the year but is closely watched nonetheless. This year could be different: As of 6:30 pm Eastern time Monday, shoppers had spent 11 percent more online than they did on the same day last year, the Wall Street Journal reported, citing statistics from Coremetrics.
Retailers mostly declined on Monday as more shoppers hit the stores over Black Friday weekend but on average spent less, but online retailers Amazon and eBay advanced.
AIGreduced its debt to the government by $25 billion, giving the government stakes in two of its units totaling that amount ahead of their planned spinoff.
Financials were the big winners on Monday as investors bet that any Dubai impact on U.S. banks would be limited.
But banking analyst Dick Bove said he's concerned that the government wants to increase capital requirements for banks. Of the top 30, Bove said, only 4 don't need to raise capital— Citigroup, State Street, Northern Trust and First Horizon.
Ford will kick off November sales reports at noon ET, followed by the other major automakers. Auto industry watchers are looking for November sales to come in at an annual rate of 10.4 million units, roughly in line with October's numbers.
The earnings calendar is extremely light once again this morning, but we will get quarterly numbers from office supplies retailer Staples before the opening bell.
- Peter Schacknow and Reuters contributed to this article.
Correction: An earlier version of this story said Credit Suisse downgraded its rating AIG to "underperform" today. Credit Suisse actually downgraded the stock to "underperform" in September and reiterated that rating a few weeks ago.
TUESDAY: Auto sales; pending-home sales; ISM manufacturing; construction spending; Fed's Plosser speaks; Obama speaks; Earnings from Staples
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; Challenger, ADP jobs reports; Fed's Lacker speaks; Fed's beige book; Earnings from Aeropostale
THURSDAY: Chain-store sales; weekly jobless claims; ECB, UK rate meetings; Bernanke renomination hearing; ISM services index; Earnings from Toll Brothers, Marvell Tech and Novell
FRIDAY: November jobs report; Fed's Plosser, Bullard speak; factory orders; Earnings from Big Lots
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