US stocks leap on first day of new year - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

US stocks leap on first day of new year

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NEW YORK (AP) — Stocks opened sharply higher Tuesday in the first trading of 2012 after positive economic reports from around the globe. The Dow Jones industrial average jumped more than 260 points.

The gains gave the market a head start on the new year after a flat 2011.

Banks and materials and industrial companies posted the largest gains. Bank of America rose 5.4 percent and Caterpillar Inc. 4.7 percent, the biggest winners among the 30 stocks in the Dow.

The gains were broad. All but one of the 30 Dow stocks, Johnson & Johnson, were higher, and nine out of the 10 industry groups in the Standard & Poor's 500 index rose. Utilities, traditionally conservative stocks to own, were the only sector to fall.

In the latest sign of strength in the U.S. economy, manufacturing expanded in December at the fastest pace in six months. Construction spending jumped in November as builders spent more on single-family homes, apartments and remodeling projects.

Germany, Europe's largest economy, reported that the number of people unemployed last year was the lowest in two decades. And a Chinese manufacturing index rose in December, reversing a November slide and raising hopes that China's economic slowdown is under control.

At 10:30 a.m. EST, the Dow was up 242 points, or about 2 percent, at 12,459. It had been up as much as 262 points earlier in the day. The S&P 500 was up 25 points at 1,283, and the Nasdaq rose 57 to 2,662.

January is traditionally a fairly good predictor of the year to come for U.S. stocks. In the past 83 years, the full year has taken its direction from the first month 60 times, said Howard Silverblatt, senior index analyst at S&P.

The first day is less useful. If you were to bet on whether the market would finish the year up or down based on how it performed the first day, you would be right only about half the time.

Tuesday was on the track to be the fourth straight year of market gains on opening day. On Jan. 3, 2011, the S&P rose 14 points, but the market finished the year almost exactly where it began. The S&P 500 finished down a sliver — 0.04 of a point.

The economic reports overshadowed, at least for a day, concerns in the global markets about the European debt crisis, which will probably be the main catalyst for markets in the weeks ahead.

Earlier Tuesday, the government of debt-crippled Greece's warned that it would have to ditch the euro currency if it cannot secure a second international bailout worth $169 billion.

Investors have been afraid that a Greek exit from the euro currency union would further disrupt the Greek economy and cause heavy losses for European banks that hold Greek government debt, perhaps triggering a global financial crisis.

In other corporate news:

— Chesapeake Energy Corp. rose 4 percent after the energy company sold a part of its Ohio oil and gas business to a unit of French energy company Total SA for $2.32 billion.

— Rumbus Inc. jumped 10 percent after the technology licensing company raised its fourth-quarter revenue forecast to $83 million from an earlier range of $66 million to $71 million.

Copyright 2012 The Associated Press.

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