By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rallied on Tuesday, helped
by data showing a smaller-than-expected trade gap and gains by
health-care stocks following an upgrade for UnitedHealth Group
Inc.
Firmer overseas markets also provided a lift, and traders
absorbed largely encouraging comments from Federal Reserve
officials.
The S&P 500 (SPX) gained 11.11 points, or 0.6%, to close at
1,837.88, snapping the three-day losing streak that it endured at
the start of 2014. The benchmark index climbed nearer to its record
closing level of 1,848.36 hit on Dec. 31.
The Dow Jones Industrial Average (DJI) rose 105.84 points, or
0.6%, to end at 16,530.94. UnitedHealth Group Inc. (UNH) performed
best among Dow components and provided a boost to the blue-chip
index after Deutsche Bank upgraded the company on Tuesday to buy
from hold. The Dow moved near to its own Dec. 31 record close of
16,576.66.
The Nasdaq Composite (RIXF) advanced 39.50 points, or 1%, to
finish at 4,153.18.
Tuesday's trade report made some strategists more optimistic
about U.S. economic growth.
"The U.S. trade deficit is the arcane statistic to watch in
2014, and it opened with a positive whammy, decreasing by 13% from
a revised down deficit last month," said strategists at ING
Investment Management in a note on Tuesday.
"This is a direct benefit to top line GDP growth, and we can
expect positive surprises here as well. So while the S&P 500
began the year with a rough start, it looks like the economy is
doing just fine."
Check out MarketWatch's live blog recap of Tuesday's
stock-market action
* Today's economic news: The U.S. trade deficit fell to $34.3
billion in November, the Commerce Department said on Tuesday. That
was a steeper-than-expected drop and could signal a stronger
economy. Meanwhile, Boston Fed President Eric Rosengren said the
central bank should only wind down its bond-buying program
gradually. San Francisco Fed President John Williams said the Fed
likely will end its bond buys this year, adding that he sees
"newfound momentum" in the economy.
* What strategists are saying: "As a whole, the November trade
report adds upside risk to our [fourth-quarter] GDP forecast and it
now looks like [fourth-quarter] real GDP growth is tracking closer
to 3.0% than the current 2.5% forecast," said Daniel Silver, a J.P.
Morgan economist, in a note on Tuesday. But overall this week,
investors likely will pay the most attention to Friday's jobs
report and Wednesday's release of minutes from the Fed's Dec. 18
meeting, where the central bank decided to taper its bond buys.
Earnings season also unofficially kicks off Thursday.
* Today's movers and shakers: Shares in retailer GameStop Corp.
lost 8.4% on news of another way to buy video games, while Netflix
Inc. fell 5.6% after Morgan Stanley cut the video-streaming company
to underweight from equal weight. Read more in the Movers &
Shakers column.
* Other markets:European stocks pushed higher Tuesday after the
annual rate of euro-zone inflation fell further below the European
Central Bank's target in December. That triggered some deflation
concerns, but analysts also said it could put pressure on the ECB
to respond with stimulus measures. Asian stocks closed mostly
higher, while gold fell, but the dollar rose and oil futures
snapped a five-session losing streak.
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