US open: Stocks rally on first day of 2017 trade

US stocks kicked off 2017 on a high note, buoyed by Chinese data, as the Dow jumped 150 points at the open on Tuesday.

Equity markets closed last year with three-day losing streak as the Dow drifted away from the elusive 20,000 mark.

The Dow Jones Industrial Average was 0.82% to 19,924.11, the S&P 500 rose 1.01% to 2,261.37 and the Nasdaq was higher at 1.13% to 5,443.91 at 1518 GMT.

Lukman Otunuga, research analyst at FXTM, said: “Stock markets stepped into 2017 with style as the bullish combination of upbeat data from China, rising oil prices and the new year effect elevated global sentiment.

“Asian shares glided higher during trading on Tuesday while European markets were boosted by the FTSE100 which hit fresh all-time highs above the 7,200 mark. With the impressive start in Asian and European markets reviving investor risk appetite, Wall Street could be expected to explode into gains during trading this week. With themes such as a strengthening dollar, oil price sensitivity and events in Europe sparking extreme levels of volatility this quarter, investors may be in-store for another roller-coaster ride.”

Meanwhile, strengthening oil prices also provided a boost as investors were hopeful that OPEC’s agreement to cut production – which started on Sunday – will help to balance an oversupplied market this year.

Brent crude climbed 2.3% to $58.15 a barrel, and West Texas Intermediate increased 2.29% to $54.98 at 1457 GMT.

Gold on Comex was flat at 0.02% to 1,151.90 per troy ounce.

In currency markets, the dollar was up 0.52% versus sterling to 0.8187, was higher 0.99% against the euro to 0.9660, and added 0.81% versus the yen to118.50.

Elsewhere, China’s Caixin manufacturing purchasing managers’ index for December printed at 51.9 compared to 50.9 the month before and marking its strongest level since 2013. Analysts had been expecting the index to be unchanged at 50.9

On the US data front, Markit’s manufacturing purchasing managers’ index rose to a 21 month high to 54.3 in December, up slightly from 54.1 in November.

The ISM manufacturing PMI also rose to its highest level in two years to 54.7% in December, from 53.2% the previous month. Economists had expected a reading of 53.8%.

Construction spending rose to 0.9% in December, from 0.6% in November and well above the forecast of 0.5%.

In corporate news, General Motors was up 0.86% as president-elect Donald Trump hit out at the carmaker on Twitter for manufacturing Chevrolet’s Chevy Cruze model in Mexico and then selling them tax free to American dealers tax free. GM said that most of its cars are built in the US.

PayPal was up 2.38% as the online payments company’s stock was upgraded to ‘buy’ from ‘neutral’ by Monness Crespi Hardt.

Federal-Mogul’s shares were down 2.13% as Icahn Enterprises said it best and final offer of $10 per share for the company will expire on 17 January. Icahn’s shares were up 1.18%

Looking ahead, the Federal Open Market Committee minutes will be published on Wednesday and the all-important nonfarm payrolls report on Friday.