US stocks have started the new year with a big lift, and that could be a promising sign for the rest of 2011.
Investors call it the “January barometer.” According to the Stock Trader’s Almanac, a gain in the Standard and Poor’s 500 stock index over the first five days of January has led to annual gains nearly 90% of the time.
“All of the forecasts come out of Wall Street, and those expectations for the year give January a nice indicative effect of what the year will look like,” said Jeffery Hirsch, the editor of the Stock Trader’s Almanac.
Signs that the economy is improving pushed stock indexes higher on the first trading day of the year. Manufacturing activity and construction spending both rose more than analysts were predicting.
The Institute of Supply Management’s index of manufacturing activity rose in December for the 17th straight month. Separately, the Commerce Department said construction spending rose 0.4%in November.
The Dow Jones industrial average rose 93.24 points, or 0.8%, to close at 11,670.75.
The S&P 500 gained 14.23, or 1.1%, to 1,271.87. The Nasdaq rose 38.65, or 1.5%, to 2,691.52.
The gains were broad. All 10 company groups that make up the S&P index rose. Financial companies led the way with a 2.3% jump.
Treasury prices fell as the better economic news weakened demand for low-risk investments. The yield on the 10-year Treasury note, which rises as its price falls, moved up to 3.34%from 3.29% late on Friday.
Bank of America Corp shot up 6.4% to 14.19 dollars after the bank settled a dispute with Fannie Mae and Freddie Mac over soured mortgage investments. That was the best performance among the 30 stocks that make up the Dow index. Intel Corp had the largest fall, losing 0.9% to 20.85 dollars.