Happy New Year for stocks

Investors donned their rally caps for the first trading day of 2012, after better than expected manufacturing reports from all corners of the world lifted spirits.The Dow closed up 179 points to 12,397, its highest level since July, the S&P 500 rose 19 points to 1277 and the NASDAQ Composite added 43 points to 2648.

Manufacturing expanded in December for the 29th consecutive month, according to the Institute for Supply Management Manufacturing Report (ISM) for December 2011. PMI increased by 53.9 percent, up from 52.7 percent in November, better than the 53.2 percent expected by analysts. Adding to the cheer, the ISM employment index and the new orders index were both higher from the previous month, as prices of raw materials continued to decrease for the third consecutive month.

Across the globe, the Chinese Purchasing Managers' Index for December also showed a rise in activity, up to 50.3 from 49 in November. The bump temporarily allayed fears of a Chinese "hard landing" due to a deflating property bubble and fallout from the European debt crisis. In Australia, manufacturing expanded for the first time in six months and the British manufacturing PMI was ahead of expectations to 49.6 in December, up from a revised 47.7 the previous month.

Beyond manufacturing, there was also decent news from the U.S. housing market -- November construction spending was up 1.2 percent, three times the consensus forecast and the highest level since June 2010. (Spoiler alert on the construction report: private residential spending is 64 percent below the peak in early 2006, non-residential spending is 33 percent below the peak in January 2008 and public construction spending is now 12 percent below the peak in March 2009.) Then there was (gasp!) good news from Europe, where the German unemployment rate fell to 6.8 percent in November -- its lowest rate since 1991.

Before you take all of this data and conclude that 2011 was just a bad dream, remember what Dorothy said when she woke up in Kansas after that sojourn to Oz: "It wasn't a dream...and I remember that some of it wasn't very nice." Those not-nice parts, like the European debt crisis, could still haunt us in 2012.

Then there's the Carmen Reinhart and Kenneth Rogoff (authors of "This Time Is Different,") assertion that recessions after financial crises (the 2008 housing and credit crashes qualify) and their subsequent recoveries take somewhere between 7 to 10 years. Or how about this gem of a quote in today's Wall Street Journal from Robert Prince, co-chief investment officer at Bridgewater: "What you have is a picture of broken economic systems that are operating on life support...we're in a secular deleveraging that will probably take 15 to 20 years to work through and we're just four years in."

Gulp. That's a little too dour for the first post-holiday trading day. Let's just enjoy the move and promise that we won't count on it lasting.