Adam Shell and Kim Hjelmgaard, USA TODAY
NEW YORK - The Standard & Poor's 500 stock index on Tuesday broke its three-day slump that kicked off 2014, its longest streak of futility to start a year since 2005.
Traders were encouraged by a drop in the U.S. trade deficit that signals stronger economic growth ahead. The Senate confirmation of Janet Yellen as the next Federal Reserve chief after last night's market close also was viewed as a positive. Yellen is expected to continue the policies that are supportive of financial markets that were put in place by outgoing Fed chief Ben Bernanke, whose appointment ends Jan. 31.
By the close, the S&P 500 had gained 0.6% on the day, settling around 1,838. The Dow Jones industrial average climbed about 106 points, its first triple-digit gain of the new year, or 0.6% to 16,531. The Nasdaq composite index closed up 1% to 4,153.
Investors, however, are also looking ahead to other potentially market-moving news this week, including the release of the Federal Reserve's mid-December meeting minutes on Wednesday, the official kickoff to fourth-earnings earnings season with Alcoa's report Thursday, and a monthly jobs report on Friday that will indicate whether the improvement in employment continued in December.
The trade gap dropped 12.9% in November to $34.3 billion, the Commerce Department said Tuesday. That's not only well below the $39.3 billion deficit in October and the $40 billion Wall Street was expecting, but also the smallest monthly trade deficit since October 2009.
Wall Street started the week with losses. On Monday, the Dow dropped 0.3% to 16,553 the S&P 500 shed a similar amount to 1,826.77 and the Nasdaq composite fell 0.9% to 4,150. The closely watched benchmark S&P 500 index has not suffered a hat trick of losses to kick off a new year was back in 2005.
Benchmark oil for February delivery was up 45 cents a barrel to $93.88 in electronic trading on the New York Mercantile Exchange. The contract fell 53 cents to close at $93.43 on Monday.
The yield on the 10-year Treasury note was little changed at 2.96% from Monday.
Stocks have started the new year in lackluster fashion - especially compared with how they closed out 2013 at record highs.
"What we've seen so far this year is most likely just a case of profit taking rather than anything else," said Craig Erlam, market analyst at Alpari. "That said, it has been accompanied by a number of disappointing economic releases, not just in the U.S., but also in other major economies."
In Asia, Japan's Nikkei 225 index fell 0.6% to 15,814.37 while Hong Kong's Hang Seng benchmark added 0.1% to 22,712.78. China's Shanghai composite index rose 0.1% to 2,047.32.
European markets were higher. Britain's FTSE 100 index rose 0.4% to 6,755.45 and Germany's DAX index gained 0.8% to 9,506.20.