Markets greeted investors with New Year wishes as they closed higher and major benchmarks set new records on Monday. Robust growth in manufacturing and a better-than-expected construction spending report helped the indices post significant gains. Investors can take lot of heart from this positive start as historical data suggests that markets opening up with gains usually leads to a successful year.
According to reports from the Institute for supply Management, manufacturing data sprung higher with the new-orders index posting higher results. The manufacturing sector also jumped for the 17th consecutive month in December. Additionally, data on the global front suggested that China's inflation may subside after a slowdown in the manufacturing sector while Europe's manufacturing sector posted better-than-expected growth during the last month. In addition, construction spending increased for the third straight time in November. This was also the highest level recorded since June last year.
The Dow Jones Industrial Average jumped 0.81% and closed at 11,670.75, its highest level since August 28, 2008. The S&P 500 rose 1.13% and closed at 1,271.87, its highest close since September 3, 2008. The Nasdaq ended the day at 2,691.52, up 1.46%, its highest close since December 26, 2007. The CBOE Volatility Index (VIX) fell below 18, showing signs of an increase in investors' confidence. On the New York Stock Exchange, breadth was on the positive side as 2,236 stocks advanced for every 791 stocks that ended in the red. After a couple of weeks of light volumes, Monday registered near normal consolidated volumes of 4.3 billion shares.
On a sectoral basis, financials and energy led the rally. The financial sector was boosted by news that Bank of America BAC had agreed to pay $2.8 billion to mortgage finance heavyweights Fannie Mae and Freddie Mac as settlement of claims over bad mortgages. Shares of Bank of America gained 6.4%. Other gainers in the sector were JP Morgan JPM, Citi C, Morgan Stanley MS, and Goldman Sachs GS which gained 2.73%, 3.59%, 3.75% and 2.91% respectively. The energy sector was led by Murphy Oil MUR which rose 2.09%, Valero Energy VLO which jumped 2.72%. Sunoco SUN was up 2.53%.
Coming to some key stocks that were boosted by analyst upgrades, Alcoa AA rose 2.66% after Deutsche Bank raised its rating from “hold” to “buy” primarily due to a rise in aluminum prices. Boeing BA gained 1.8% after JP Morgan upgraded the stock from “neutral” to “overweight”.
Among other stocks in focus, shares of book seller Barnes & Noble BKS surged 9% after its preliminary holiday same-store sales soared 9.7% primarily due to the sales contribution of its Nook e-reader device. Clorox CLX slipped 2.7% after it projected fiscal second quarter earnings and sales below analyst expectations primarily due to weak sales of disinfectants, bleach and cat litter in the U.S.
ALCOA INC (AA): Free Stock Analysis Report
BOEING CO (BA): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
BARNES & NOBLE (BKS): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
CLOROX CO (CLX): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
MURPHY OIL (MUR): Free Stock Analysis Report
SUNOCO INC (SUN): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
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