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01 December 2023

US stocks close higher after Europe rally


US stocks followed European counterparts higher Tuesday buoyed by encouraging economic news from Germany and China, and a strong reading from a New York regional economic activity indicator.

But a poor earnings report from Citigroup spilled over to affect other bank shares and held back the bulls.

After jumping more than one percent in early trade, the Dow Jones Industrial Average pulled back to finish the session up 60.01 points (0.48 percent) at 12,482.07.

The broad-based S&P 500 gained 4.58 points (0.36 percent) to 1,293.67, while the tech-rich Nasdaq Composite added 17.41 (0.64 percent) to 2,728.08.

"US stocks kicked off an historically lackluster holiday week on the right foot today, thanks to encouraging economic data from around the globe," said Andrea Kramer at Schaeffer's Investment Research.

US markets were closed Monday for the Martin Luther King Day holiday.

Official Chinese data showed the world's second-largest economy grew 8.9 percent in the fourth quarter, slowing from the prior quarter but by less than analysts expected.

Investors appeared to shrug off Standard & Poor's credit downgrade on Monday of the eurozone's bailout fund, the European Financial Stability Facility, as well as the rating agency's downgrades Friday of nine European nations' sovereign ratings.

Bulls instead welcomed a stronger-than-expected reading of economic sentiment in Germany, Europe's biggest economy.

A US manufacturing activity survey also fueled optimism. The New York Fed's Empire State index showed a pick-up in January that widely topped expectations.

Financials were in focus after earnings reports from Citigroup and Wells Fargo.

Citi shares slumped 8.2 percent to ê28.22 after posting fourth-quarter and full-year earnings that missed market expectations.

Wells Fargo reported full-year profit was up 29 percent from 2010; shares gained 0.7 percent to ê29.83.

Carnival, the world's leading cruise ship operator, plunged 13.7 percent to ê29.60. The wreck on Friday of the Costa Concordia off the Italian coast left 11 dead and about two dozen missing, according to the latest tally.

Bond prices climbed. The yield on the 10-year Treasury held unchanged at 1.85 percent from Friday, while the 30-year fell to 2.89 percent from 2.90 percent.

Bond prices and yields move in opposite directions.