Stocks start 2011 with a lift

January 3, 2011 7:08:59 AM PST
Stocks started 2011 with a lift Monday thanks to better than expected economic news out of Europe. Shares rose throughout Europe after a report showed that manufacturing in the eurozone expanded faster than analyst's forecasts. The Euro Stoxx 50 index rose 0.8 percent. Benchmark indexes in France, Spain, and Germany each gained more than 1.1 percent.

Investors will get reports on manufacturing growth and construction spending in the U.S. on Monday as well. Economists expect that the Institute of Supply Management's index of manufacturing activity will show that the sector grew in December for the 17th straight month. Analysts predict that the index will remain unchanged at 56.6. Any reading above 50 indicates growth.

Separately, the Commerce Department will release its report on construction spending in November. Economists are forecasting a slight gain of 0.2 percent. In October, construction spending rose by 0.7 percent.

In early trading, the Dow Jones industrial average rose 107 points, or 0.9 percent, to 11,683. The Standard and Poor's 500-stock index gained 12, or 1 percent, to 1,270. The Nasdaq composite rose 33, or 1.2 percent, to 2,686.

Gains came across the market. All 10 company groups that make up the S&P index rose. Alcoa Inc. jumped 4.9 percent to $16.15 to lead the 30 stocks that make up the Dow. Coca-Cola Co. had the largest fall, losing less than 0.1 percent to $65.74.

Shares ended mixed on Friday, which marked the last day of trading in 2010. For many investors, 2010 turned out better than expected. Every major stock market index in the U.S. increased by double-digits. The S&P 500, the market measure used by most professional investors, returned 15.1 percent after dividends. Historically, the index has returned an average of 10.01 percent a year, including dividends.

Stocks ended 2010 especially strong. The S&P gained 20 percent over the last four months of the year, capped by a 7 percent rise in December.

In corporate news Monday, Bank of America Corp. said it will take a provision to buy back $3 billion in bad loans issued by its Countrywide Financial unit. The bank's shares gained 61 cents, or 4.6 percent, to $13.95.

The dollar rose 0.3 percent against an index of six heavily traded currencies.