Stocks Start New Year With Big Rally

Updated from 4:05 p.m. EST

Stocks surged on the first trading day of the new year, as a better-than-expected manufacturing report gave investors hope that the economy is on track for a strong recovery.

The Dow closed up 266 points, or 3.2%, at 8607, while the S&P 500 gained 29 points, or 3.3%, to 909. The Nasdaq added 49 points, or 3.7%, to 1385.

"The manufacturing report caught everyone off guard," said Jim Herrick, managing director of trading at Robert W. Baird. "It's seen as a harbinger of future economic news and that's why the market rallied." ...