Stocks Rally After ISM Manufacturing Beat

Stocks rallied on the first trading day of the new year after the ISM report on manufacturing topped expectations and the dollar pulled back.

The ISM's gauge of manufacturing came in at 55.9 for December, better than the 54.1 expected and 53.6 registered in November.

Meanwhile, construction spending fell 0.6 percent in November, roughly in-line with expectations, after a 0.5-percent drop in October. Economists had expected a 0.5-percent decline.

The market was also buzzing about comments from Ben Bernanke on Sunday: The Fed chairman said the central bank must be open to rate hikes as a possible means of popping asset bubbles. He was speaking at the American Economic Association's annual meeting.

U.S. markets were closed Friday for New Year's Day. On Thursday, stocks fell, with the three major indexes down about 1 percent. For 2009, the Dow gained 19 percent, the S&P rose 24 percent, and the Nasdaq added 44 percent.

The US dollar index dropped nearly 0.5 percent in early trade as US light, sweet crude oil prices rumbled past $81 a barrel and gold jumped past $1,100 an ounce.

Shares of Chesapeake Energy jumped after French oil giant Total agreed to buy a 25-percent stake in the company's barnett Shale gas fields for $2.25 billion.

Alcoa , Intel and Boeing led the Dow.

Technology looked particularly strong: Garmin , Sirius XM and Broadcom were among the early leaders on the Nasdaq.

European shares started the year higher, while Asian stocks closed mixed, eyeing economic data later in the week.

The earnings calendar is virtually empty today, but fourth quarter earnings season starts soon and likely will be a major influence in the markets in the weeks ahead.

The dispute over carriage of the Fox Networks has been resolved between Time Warner Cable and Fox parent News Corp., while customers of Cablevision remain without Food Network and HGTV, owned by Scripps, as those two parties continue a dispute over carriage rates.

Switzerland's Novartisis seeking to buy the portion of eye care product makerAlcon that it doesn't already own for $39.3 billion. The deal would involve acquiring a 52% stake in Alcon from Nestle.

Winterizing Your Portfolio - A CNBC Special Report
Winterizing Your Portfolio - A CNBC Special Report

New airport rules go into effect today, with passengers from a handful of countries being subjected to enhanced screening techniques. The TSA says this will be applied to anyone traveling from or through nations regarded as state sponsors of terrorism or "other countries of interest".

The Census Bureau kicks off its $300 million campaign to coax Americans to fill out their census forms, hoping to top the 67% response rate from the 2000 census.

— Reuters contributed to this article.

This Week:

MONDAY: World's Tallest Building Opens (Dubai); ISM manufacturing; construction spending; Fed's Lockhart speaks
TUESDAY: Auto sales; factory orders; pending-home sales
WEDNESDAY: EU regulators' decision on Cadbury/Kraft deal; weekly mortgage apps; Challenger, ADP jobs reports; ISM services index; weekly crude inventories; Fed minutes; Earnings from Family Dollar, Monsanto, Bed, Bath & Beyond
THURSDAY: CES; chain-store sales; Bank of England rate decision; jobless claims; Fed's Hoenig speaks; Earnings from Constellation, Lennar
FRIDAY: Jobs report; wholesale trade; Fed's Lacker speaks; consumer credit

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