The Biggest Stock Market Stories of 2012

Date: January 3

Dow Jones Industrial Average: +179 points, or 1.5%, at 12,397

S&P 500: +19 points, or 1.6%, to 1,277

Nasdaq +44 points, or 1.7%, to 2,649

Top Story: First day of trading

Market Postmortem: Stocks held on to strong New Year's gains, with a triple-digit advance by the Dow Jones Industrial Average, as encouraging economic reports on U.S. manufacturing and construction spending boosted optimism the economy would continue to recover into 2012.

The Dow closed out 2011 with a solid 5.6% gain while the S&P 500 closed the year essentially flat and the Nasdaq dropped by 1.7%.

Promising signs for the health of the U.S. economy gave markets an early jump start to 2012. The Institute for Supply Management reported that its manufacturing index rose to 53.9 in December from 52.7 in November. Economists polled by Thomson Reuters expected the index to come in at 53.2. Readings of more than 50 indicate economic expansion.

Construction spending figures for November also topped estimates, although the prior month's data was downwardly revised. The Census Bureau reported a 1.2% rise in construction spending for November, after a revised 0.2% drop in October. Economists expected a 0.5% rise after an originally reported gain of 0.8% in October.

Stocks held steady after the Federal Reserve revealed it will begin publishing forecasts of its own action later this month in an effort to increase transparency and better shape the expectations of investors, according to the minutes of the Federal Open Market Committee's most recent meeting released Tuesday.

"The biggest question for 2012 is 'will the US economy continue to grow slow, but steady?'" said Marc Pado, market strategist with Cantor Fitzgerald. "Shorter term, we're looking forward to an earnings-driven rally in January, but then would take a defensive position, as Congress debates a budget proposal and the European Union turmoil heightens," added Pado.

In corporate news, Chesapeake Energy(CHK) and EnerVest will receive $2.3 billion from France's Total(TOT) for a 25% stake in a joint venture for oil drilling in the Utica Shale area of Ohio. Under the deal, Total will pay Chesapeake $610 million up front for 619,000 acres in 10 counties in Ohio; EnerVest is receiving $290 million. Chesapeake will get a further $1.42 billion in exchange for drilling through 2014. Chesapeake shares advanced 5.9% to $23.60 and Total shares increased 2.7% to $52.47.

BP(BP) calls on Halliburton(HAL) to pay all costs related to the clean-up of the Gulf of Mexico oil spill in April 2010. BP, the U.K. oil giant, previously put the costs at around $42 billion, according to Reuters. Halliburton cemented the failed well that caused the biggest offshore oil spill in the U.S. The explosion of the well also killed 11 people. BP, in a court filing, said it was suing to recover costs and expenses from cleaning up the oil spill, lost profit, and "all other costs and damages incurred by BP related to the Deepwater Horizon incident and resulting oil spill," Reuters reported. BP gained 3.3% to $44.14, while Halliburton shares declined 1% to $34.15.

Sears(SHLD), which said last week it was closing up to 120 of its stores after a dismal holiday selling season, named a new chief merchandising officer on Tuesday. The struggling department-store retailer tapped Ron Boire as executive vice president, chief merchandising officer and president of its Sears and Kmart formats. Boire was previously president and CEO of Brookstone. The stock slipped 1.1% to $31.43.

February oil futures settled up $4.13 to $102.96 a barrel after Iran stepped up threats against the U.S. in retaliation for new economic sanctions targeting the oil sector of the world's second largest producer of the fuel. In other commodities, February gold futures gained $33.70 to $1,600.50 an ounce.

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