Wall Street kicks off 2017 with a flourish
NEW YORK - U.S. stocks broke a three-day losing streak Tuesday and ushered in the new year with broad gains. Health care stocks, which struggled for most of last year, climbed.
Stocks started the day with a surge as the Dow Jones industrial average rose 175 points in the first hour of trading. Bond yields jumped, which took bank stocks higher. The price of oil also rose early on, but it began slipping after 10 a.m. Investors started buying stocks again late in the day, however, and major indexes closed with a flourish.
The Dow Jones industrial average ended Tuesday by jumping 120 points, or 0.6 percent, to 19,882. The Standard & Poor’s 500 index closed up 19 points, or 0.8 percent, to 2,258. The Nasdaq composite finished with a 46 point gain, or 0.9 percent, to 5,429.
Energy companies, banks and technology companies made some of the largest gains, and lower-risk investments like utility companies lagged the rest of the market. That’s a sign investors expect stronger economic growth that will help those companies do more business.
“Corporate earnings are telling us that it’s a bull market,” said Karyn Cavanaugh of Voya Investment Strategies. Cavanaugh said earnings and revenues look “very good” for 2017.
The Russell 2000 index, which tracks small-company stocks, added 8 points, or 0.6 percent, to 1,365. The Russell rose almost 20 percent last year and did far better than indexes focused on larger companies.
Drug companies helped take health care stocks higher. Merck (MRK) rose $1.28, or 2.2 percent, to $60.15. Biotech giant Amgen (AMGN) picked up $4.52, or 3.1 percent, to $150.73, and prescription drug distributor McKesson (MCK) gained $6.98, or 5 percent, to $147.43.
The S&P 500’s health care index fell 4 percent last year. The S&P 500 itself rose 9.5 percent for 2016, and all of its other industrial sectors rose at least a small amount.
Investors have been avoiding drug company stocks because they’re worried the government will intervene to reduce prices. But Cavanaugh said the companies are appealing because they’ve been reporting better growth than most other industries.
“If you look at earnings and revenues, they’re one of the leaders,” she said.
Xerox (XRX) surged $1.14, or 19.8 percent, to $6.89 after it split itself in two, a move the company announced almost a year ago. The original Xerox kept its printer and copier business. The second company will focus on business process outsourcing, providing payment processing and other services. Xerox will receive $1.8 billion in cash.
The new company, Conduent, now trades under the ticker symbol “CNDT.” That stock lost $1.18, or 7.9 percent, to $13.72.
Oil prices jumped in early trading but turned around to finish lower. U.S. crude gave up $1.39, or 2.6 percent, to $52.33 a barrel in New York. Brent crude, used to price international oil, skidded $1.35, or 2.4 percent, to $55.47 a barrel in London.
Despite that slump, energy companies traded higher. But natural gas companies dropped as natural gas futures dropped 40 cents, or 10.7 percent, to $3.33 per 1,000 cubic feet. Southwestern Energy (SWN) lost 85 cents, or 7.9 percent, to $9.97 and Cabot Oil & Gas (COG) gave up $1.02, or 4.4 percent, to $22.34.
The manufacturing sector continued to recover and ended 2016 on a strong note. The Institute for Supply Management said its manufacturing index rose to 54.7 in December, its highest reading of the year. That was the fourth straight month of expansion and the ninth out of the last 10. The result was a bit stronger than analysts expected.
Graphics processor maker Nvidia (NVDA) couldn’t break out of a recent slump. The stock more than tripled in value last year, but hit a wall in the final days of trading. The stock slid $4.73, or 4.4 percent, to $102.01. It’s down 13 percent since Dec. 27, when it closed at an all-time high.
Bond prices fell slightly. The yield on the 10-year Treasury note rose to 2.45 percent from 2.43 percent late Friday. Yields made a much bigger move earlier in the day.
Utility companies fell Tuesday, and real estate investment trusts and companies that sell household goods rose less than the rest of the market. Those stocks are often compared to bonds because they pay large dividends, but the jump in yields Tuesday encouraged investors to look elsewhere.
The price of gold climbed $10.30 to $1,162 an ounce. Silver rose 42 cents, or 2.6 percent, to $16.41 an ounce. Copper slipped 2 cents to $2.49 a pound.
In other energy trading, wholesale gasoline fell 5 cents, or 2.9 percent, to $1.62 a gallon. Heating oil lost 5 cents, or 3 percent, to $1.68 a gallon.
The dollar jumped to 117.68 yen from 116.78 yen. The euro slumped to $1.0410 from $1.0531.
The FTSE 100 index in Britain rose 0.5 percent to another all-time high. The French CAC 40 added 0.3 percent. Germany’s DAX slipped 0.1 percent. Hong Kong’s Hang Seng index gained 0.7 percent, and the Kospi in South Korea rose 0.9 percent. Tokyo’s stock market remained closed for the New Year’s holiday.
