Stocks Kick Off 2012 With a Bang, Led by Banks
Stocks eased off their highs in the final minutes of trading, but still finished the first trading day of 2012 with a bang, as Wall Street cheered a handful of better-than-expected economic reports from around the world.
The Dow Jones Industrial Average jumped 179.82 points, or 1.47 percent, to finish at 12,397.38, led by Alcoa and JPMorgan . McDonald's was the biggest laggard on the blue-chip index.
The S&P 500 rallied 19.46 points, or 1.55 percent, to end at 1,277.06. The Nasdaq added 43.57 points, or 1.67 percent, to close at 2,648.72.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished below 23.
Most S&P sectors ended firmly in the black, led by financials,while utilities dragged.
“Market’s feeling euphoric and focusing on the positives—we’ve had better news out of Asia and Europe,” said Kenny Polcari, managing director of ICAP Equities. “I think the euphoria stays until Jan. 9 when Sarkozy and Merkel meet [in Berlin]…and barring an implosion in Europe, we may see a bit of a rally.”
Worries over the European debt crisis, which dictated the wild market swings for most of the year, are expected to continue.
French President Nicolas Sarkozy, German Chancellor Angela Merkel and British Prime Minister David Cameron all warned of a difficult year aheadin their New Year messages to their respective nations.
“Volume isn’t telling us much today,” said Joe Saluzzi, co-manager of trading at Themis Trading. “I expect pain to the upside and pain to the downside…it’s a maximum frustration market again and there will be more days when stocks gap up and down 200 points.”
On the economic front, growth in the U.S. manufacturing sector accelerated in December, according to the Institute for Supply Management. And construction spending increased to its highest level since June 2010, according to the Commerce Department.
January has typically been one of the strongest months for equities. And according to market statistics, on days where the first trading day of the year ends higher, the full-year closes in positive territory almost 70 percent of the time.
“[Today] was a good rally—as goes January, so goes the year and the first five days gives us an idea as to what will happen in the month of January,” said Sam Stovall, chief investment strategist at Standard & Poor’s. “In the eight times since 1948 that we did have an up January in an election year, we continue to rise 100 percent of the time, so if history repeats itself, let’s hope that we have a positive January.”
Boeing won a $3.5 billion missile contract from the U.S. Defense Department, beating out rival Lockheed Martin .
Fellow Dow component Cisco advanced after JPMorgan raised its rating on the networking equipment company to "overweight" from "neutral."
And Micron Technology surged after Barclays boosted its rating on the chipmaker to "overweight" from "equalweight."
Meanwhile, Intel gained even after Barclays cut its rating to "equal weight" from "overweight."
Chesapeake Energy sold a stake in a shale gas projectto French oil giant Total for $2.3 billion. And BP will sue contractor Halliburton to recover cleanup costs related to the massive 2010 Gulf of Mexico oil spill.
Oil prices started the year with a steady climb near $103 a barrelamid worries over possible Iranian oil supply disruptions.
Starbucks finished lower after the coffeehouse chain said it is raising prices by around 1 percentin the U.S. Northeaset and Sunbelt regions.
Elsewhere, Teva Pharmaceutical said its CEO Shlomo Yanai will retire in May and will be succeeded by Bristol-Myers Squibb executive Jeremy Levin.
The Federal Reserve announced it will begin issuing policymaker forecastsfor its benchmark interest rate later this month and when officials expect the first rate rise to occur.
According to the Fed minutes, a number of officials believed economic conditions could "well" warrant a further easing of monetary policy, and an enhanced communications framework could make any poicy shift more effective.
—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC—
On Tap This Week:
WEDNESDAY: Weekly mortgage applications, Challenger job-cut report, factory orders, auto sales; Earnings from Mosaic
THURSDAY: ADP employment report, jobless claims, ISM non-mfg index, oil inventories, chain-store sales; Earnings from Monsanto, Constellation Brands, Family Dollar
FRIDAY: Non-farm payrolls
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