NEW YORK ( TheStreet) -- Stocks rose Tuesday as investors looked to promising economic data from around the globe, including signs that China will avoid a hard landing.
The three major averages finished well off the session's highs, however, with the Dow Jones Industrial Average up 60 points, or 0.5%, at 12,482, after rising more than 150 points earlier in the day. The S&P 500 closed up 5 points, or 0.4%, to 1,294 and the Nasdaq gained 17 points, or 0.6%, to 2,728.
Chinese gross domestic product growth slowed to a rate of 8.9% in the fourth quarter, its slowest growth in 10 quarters, but better than the 8.7% expected by economists, according to a survey by Thomson Reuters. The Chinese statistics bureau also reported that industrial production increased 12.8% in December from a year earlier, a sign that China may yet avoid a hard landing provoked by declining demand from Europe.
Investors looked fondly on the prospect of monetary policy easing after growth slowed to its lowest level in more than two years in the world's second-largest economy. While better-than-expected, China's falling GDP growth led to speculation the government may have to loosen controls to maintain high levels of expansion through 2012.Market participants noted that on the whole, market sentiment was turning positive despite a sweeping downgrade of nine European countries by ratings firm Standard & Poor's on Friday. "There's a much better mental feeling out there even though the downgrade will still create volatility in the near term," said Jeremy Hare, managing director of investments with Gilford Securities. In the U.S., the Federal Reserve Bank of New York reported that manufacturing in the region rose to its highest level since April. The Empire State Manufacturing Survey improved to a reading of 13.5 in January from a revised 8.2 in December for a third-straight increase after hovering in negative territory June through October. Economists had expected the measure to rise to 10.5, according to Thomson Reuters. "The indicator was better than expected, which continues the recent trend of generally improving macroeconomic indicators," Dan Greenhaus, chief global strategist at BTIG, wrote in a note. "Perhaps most importantly, companies in the region remain more optimistic about the future. While this isn't a foolproof indicator, it is an important gauge of expectations and right now, there is a better tone to sentiment and data." Two-thirds of components on the Dow rose with Merck (MRK), United Tech Corp (UTX) and Cisco (CSCO) leading the way. Closing at the bottom, JPMorgan Chase (JPM) dropped 2.9% and Bank of America (BAC)dropped 1.7%. The long weekend seemed to help renew investor commitment to a new year rally. The S&P 500, which broke above the 1,300 mark on Tuesday for the first time in six months, posted its eighth day of gains in 10 trading days. Stocks fell Friday as investors anticipated Standard & Poor's downgrade announcement. Amid Tuesday's promising economic data, Europe's problems persisted with Greek citizens meeting in the capital to protest European Union and International Monetary Fund interference in the country. The uprising comes officials meet in a race-against-the-clock meeting to pull together an agreement for a second bailout package before a bond payment comes due in late March. Despite fears that Greece is moving closer to a disorderly default, European stocks posted gains. Germany's DAX closed 1.7% higher while London's FTSE climbed 0.6%. Japan's Nikkei Average settled 1.1% higher and Hong Kong's Hang Seng climbed 3.2%.
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