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Wednesday, 04 January 2012 | 00:00
DJ30 PointChange: +179.82 Level: 12397.38 NASDAQ PointChange: +43.57 Level: 2648.72 NQ100 PercentChange: +1.9 R2K PercentChange: +1.5 SP400 PercentChange: +1.0 SP500 PointChange: +19.46 Level: 1277.06 NASDAQ-Adv:1921 Dec: 693 NYSE-Adv:2351 Dec: 695 BRIEFING.COM] Stocks started 2012 on a strong note by scoring its best single-session percentage move in two weeks. The effort took the stock market to a two-month closing high.

A lack of corporate news and domestic data ahead of the open left many market participants to take their cues from foreign averages. Buying abroad was backed by a manufacturing reading from China that suggested activity began to expand after it had contracted in the prior month. India also reported its best manufacturing reading in six months. Manufacturing data from Europe also proved relatively encouraging. Recent manufacturing activity in the United Kingdom made a modest contraction, but to a lesser extent than had been anticipated. A reading on eurozone manufacturing activity was more in-line with expectations.

An advance by the euro also proved beneficial to stocks. By session's end the euro was sporting a 0.8% lead against the greenback. Stocks took little time to sprint higher following the toll of the opening bell.

Collective gains remained strong, on the order of 2%, following the release of the December ISM Manufacturing Index, which improved to 53.9 from 52.7 in November. That exceeded expectations for a reading of 53.4.

Construction spending for November also proved supportive of early gains. It increased by 1.2%, which bested the 0.5% increase that had been generally expected after a downwardly revised 0.2% decline during October.

Financial and materials stocks, the two worst performing sectors of 2011, led early gains, but the pair lacked the influence to take the S&P 500 past resistance at its multi-month closing high of 1285. From there stocks drifted lower before they made a modest attempt to reclaim gains.

Minutes from the most recent FOMC meeting failed to have any real influence on action since they offered no new insight. The minutes indicated that domestic economic activity expanded moderately despite some apparent slowing in the growth of foreign economies and ongoing financial difficulties in Europe. Although members of the FOMC generally continue to believe that the pace economic activity will pick up in 2012 and 2013, a number of members indicated that current and prospective conditions could warrant additional policy accommodation.

Stocks were unable to return to session highs, but the major averages still settled with strong gains. Participants were uninterested in defensive-oriented issues, however. As such, both the telecom and consumer staples sectors settled only fractionally above the flat line while utilities lagged the only loss of any sector. In the first session of 2012 utilities tumbled almost 2% for a poor follow up to 2011; by climbing close to 15% last year utilities were the best performing sector of the year.

Commodities also benefited from a positive bias, which took the CRB Commodity Index 2.6% higher. That made for its best single-session percentage move in more than three months. Oil was a strong influence; it climbed more than 4% to settle pit trade only a few cents shy of $103 per barrel. In addition to a weaker dollar, oil's climb came in conjunction with aggressive rhetoric from Iran regarding its occupation of shipping lanes and the presence of the U.S. ships there.

Advancing Sectors: Materials +3.0%, Financials +2.8%, Energy +2.6%, Industrials +2.1%, Tech +1.7%, Health Care +1.4%, Consumer Discretionary +0.9%, Telecom +0.1%
Unchanged: Consumer Staples
Declining Sectors: Utilities -1.7%

Source: Briefing

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