US stocks rise, breaking a three-day slump

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Associated Press

Posted on January 7, 2014 at 11:37 AM

Updated Tuesday, Jan 7 at 2:06 PM

NEW YORK (AP) — U.S. stocks are rising Tuesday, breaking a three-day losing streak at the start of the year for the Standard & Poor's 500 index. The gains were led by health care stocks. UnitedHealth Group, the nation's largest health insurer, jumped 4 percent, the biggest gain among the 30 stocks in the Dow Jones industrial average.

KEEPING SCORE: The S&P 500 rose nine points, or 0.5 percent, to 1,836 as of 1:55 p.m. Eastern time. It's still down 0.6 percent so far this year. The Dow climbed 108 points, or 0.7 percent, to 16,533. The Nasdaq composite gained 36 points, or 0.8 percent, to 4,150.

HEALTHY GAINS: Health care companies led the rise in the S&P 500, climbing 1.3 percent. UnitedHealth group rose $3.05 to $77.29 after analysts at Deutsche Bank recommended that their clients buy the stock, on expectations that the insurer will be able to push through above-average price increases this year.

Johnson & Johnson climbed $2.13, or 2.3 percent, to $94.96 after analysts at RBC Capital raised their outlook on the stock to "outperform," in part due to optimism on sales of the diabetes drug Invokana.

JANUARY STATS: The S&P 500's start to 2014 was the worst opening to a year since 2005. The last time the index closed lower for four straight days to begin a year was 1978, according to S&P Capital IQ. Even though the market ended up in both those years, a weak January is typically a harbinger of a weak year for the stock market. The performance of stocks in January has predicted the trend for 62 of the last 85 years.

YELLEN EFFECT: Janet Yellen will take the helm of a Federal Reserve after the Senate easily approved her nomination Monday. The vote puts an economist in the post who has backed the Fed's recent efforts to stimulate the economy with low interest rates and huge bond purchases.

The confirmation is a boon for stock investors, reminding them that the Fed's policies of stimulating the economy will likely continue, said Kristina Hooper, U.S. Investment Strategist at Allianz Global Investors.

"It's just a nice little halo effect," said Hooper.

THE YEAR SO FAR: Despite Tuesday's gains, stocks have started the year off on uncertain footing. Materials companies have declined 1.8 percent so far this year, led by Cliffs Natural Resources. The mining company, which was the second-biggest loser in the S&P 500 last year, is extending its slump. It's down 7 percent this year.

SHRINKING DEFICIT: The U.S. trade deficit fell in November to its lowest level in four years, an encouraging sign for the economy. Gains in energy production and stronger sales of American-made airplanes, autos and machinery lifted exports to an all-time high, the Commerce Department said Tuesday.

TOY STORY: Mattel fell 68 cents, or 1.5 percent, to $45.94, after analysts at Goldman Sachs advised their clients to sell the toy retailer's stock. Goldman is predicting that the company's earnings will struggle to match expectations as sales stagnate.

DIGITAL STREAMING: Netflix, the biggest gainer in the S&P 500 last year, fell $19.22, or 5.3 percent, to $340.41, after analysts at Morgan Stanley cut their outlook on the stock to "underweight," saying that the online video service faces increasing competition from services such as Hulu Plus, Amazon Prime and HBO GO.

TREASURYS AND COMMODITIES: The yield on the 10-year Treasury note fell to 2.94 percent from 2.96 percent Monday. The price of oil rose 57 cents, or 0.6 percent, to $94 a barrel. Gold fell $8.40, or 0.7 percent, to $1,229.60 an ounce.

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