Stock Market News for January 04, 2017

Benchmarks finished in the green on the first trading day of 2017 as investors strived to make up for losses suffered during the last few sessions of profit booking. Additionally, encouraging manufacturing and construction spending data had a positive impact on investor sentiment. However, some of Tuesday's gains were pared by late decline in oil prices , which came on the back of crude production worries. Markets remained closed on Monday.

For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) increased 0.6%, or 119.16 points, to close at 19,881.76. The S&P 500 rose 0.9% to close at 2,257.83. The tech-laden Nasdaq Composite Index closed at 5,429.08, also gaining 0.9%. The fear-gauge CBOE Volatility Index (VIX) declined 8.5% to settle at 12.85. A total of around 3,772,690,663 shares were traded on Tuesday on the NYSE. Advancers significantly outpaced declining stocks on the NYSE. For 74% stocks that advanced, 24% declined.

What Factors Led the Benchmarks Up?

Investors decided to make up for losses suffered during the profit booking that took place over the past three sessions by investing in stocks at discounted prices. This in turn had a positive impact on the broader markets. Most of the S&P 500 sectors ended in the green with financials and healthcare being the best performers.

The Health Care Select Sector SPDR (XLV) increased 1.3% and was the biggest gainer among the S&P 500 sectors. Some of its key holdings including Pfizer Inc. ( PFE ), Merck & Co., Inc. ( MRK ) and Gilead Sciences Inc. ( GILD ) climbed 1.6%, 2.2% and 3.6%, respectively.

Additionally, the Financial Select Sector SPDR (XLF) rose 1.1% and was another key gainer among the S&P 500 sectors. Key components from this sector including, JPMorgan Chase & Co. ( JPM ), Bank of America Corporation ( BAC ) and Wells Fargo & Company ( WFC ) increased 1.1%, 2% and 1.6%, respectively.

Upbeat Economic Data

The ISM manufacturing index rose from 53.2% in November to 54.7% in December and reached its highest settlement in last two years. The manufacturing index has expanded over nine months out of last ten months. This was also higher than the consensus estimate of 53.8%.

U.S. construction spending increased to its highest level since April 2006 in November. The US Census Bureau of the Department of Commerce reported construction spending of $1,182.1 billion in November, up 0.9% from upwardly revised October figure. Further, this increase in the payout by builders on residential and nonresidential structures was more than the consensus estimate of an increase by 0.5%.

Oil Prices Declined

Better-than-expected manufacturing data helped to strengthen the U.S. dollar. The U.S. Dollar Index (DXY) increased to 103.820 and settled at its highest level in 14 years. Further, reports indicated that Libya has raised its crude production from about 600,000 barrels per day (bpd) to 685,000 bpd last month. This in turn raised crude oversupply concerns, which along with stronger dollar had a negative impact on the oil prices.

Both the WTI and Brent crude decreased 2.7% and 2.4% to $52.33 per barrel and $55.47 a barrel, respectively. WTI crude price reached its lowest level in last two weeks. This had a negative impact on late trading session.

Despite decline in oil prices, the Energy Select Sector SPDR (XLE) advanced 1.1% and was one of the key gainers among the S&P 500. Both the Dow components Exxon Mobil Corporation ( XOM ) and Chevron Corporation ( CVX ) increased 0.7% and 0.1%, respectively. Both the companies possess a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Stocks That Made Headlines

SM Energy to Sell Non-Operated Eagle Ford Assets for $800M

SM Energy Company ( SM ) has inked a definitive agreement with a subsidiary of Venado Oil and Gas, LLC for the sale of its third-party operated assets in the Eagle Ford. ( Read More )

Allegion Subsidiary Acquires Republic Doors & Frames

Allegion plc ( ALLE ) acquired McKenzie-based Republic Doors & Frames, Inc. through one of its subsidiaries. ( Read More )

Generac Holdings Boosts Business with Motortech Acquisition

Generac Holdings Inc. ( GNRC ) recently announced that it has completed the acquisition of Motortech Holding GmbH & Co. KG. ( Read More )

Altra Industrial Completes Acquisition of Stromag

Altra Industrial Motion Corporation ( AIMC ) recently announced that it has successfully closed the acquisition of Stromag business of GKN plc on Dec 30, 2016. ( Read More)

AIG Sells Off Mortgage Business to Focus on Core Operations

American International Group, Inc. ( AIG ) has completed the sale of its mortgage business unit United Guaranty Corporation to Arch Capital Group Limited ( ACGL ). ( Read More )

Where Do Zacks' Investment Ideas Come From?

You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>

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GILEAD SCIENCES (GILD): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

WELLS FARGO-NEW (WFC): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

SM ENERGY CO (SM): Free Stock Analysis Report

ALLEGION PLC (ALLE): Free Stock Analysis Report

GENERAC HOLDING (GNRC): Free Stock Analysis Report

ALTRA INDUS MOT (AIMC): Free Stock Analysis Report

AMER INTL GRP (AIG): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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