Stocks eased back from session highs, though remained in the green Tuesday morning, as the Dow Jones Industrial Average's march to 20,000 proved a challenge in the new year.
The Dow gained 0.4% to 19,837 after coming within 60 points of the 20,000 milestone earlier in the session. Late last year, the Dow crept to within 15 points of the psychologically significant level. The S&P 500 was up 0.6% on Tuesday, while the Nasdaq rose 0.6%.
U.S. manufacturing activity expanded in December. The U.S. ISM manufacturing index increased to 54.7 in December, a two-year high, up from 53.2 the month earlier. Production and new orders both rose to above 60 for the first time since 2014. A separate reading on manufacturing from Markit showed the purchasing managers' index at a 21-month high.
U.S. construction spending also surged at the end of last year, hitting a more than 10-year high in November. The metric rose by 0.9%, above estimates that called for a 0.6% increase.
Chinese manufacturing activity expanded for the sixth consecutive month. The China Caixin manufacturing purchasing managers' index increased to 51.9 in December from 50.9 a month earlier. The increase was the metric's fastest rise since January 2013. China's Shanghai Composite increased by 1%, while the Hang Seng in Hong Kong rose 0.7%.
The Dow gained 13.5% in 2016, while the S&P 500 rose 9.4% and the Nasdaq added 7.5%. The Dow received a big boost in the final two months of the year as investors placed bets that a Donald Trump administration would yield higher infrastructure spending. The blue-chip index rocketed higher after the November election that saw an unexpected victory for President-elect Trump.
A rally in crude oil provided a boost to markets on Tuesday. Crude traded sharply higher as an agreement between Organization of Petroleum Exporting Countries to curb output took effect. OPEC member nations and 11 non-OPEC producers, including Russia, agreed to curb production by about 1.8 million barrels a day. OPEC member Saudi Arabia is taking the biggest cut, promising to reduce output by 486,000 barrels per day.
"The petroleum markets are testing the upside on reports that Oman and Kuwait have cut production in line with January 1 production targets, fueling optimism that the market will rebalance in 2017," Tim Evans, energy futures specialist at Citi, wrote in a note.
West Texas Intermediate crude was up 2.4% to $54.93 a barrel on Tuesday morning.
Twitter (TWTR) - Get Twitter, Inc. Report lost another of its executive team after Kathy Chen, head of operations in China, announced her resignation. Twitter, which is blocked in the region, mainly sought to seduce Chinese advertisers looking for a global audience. The company's Greater China advertiser base rose nearly 400% over the past two years. The stock rose slightly.
Analysts at Nomura picked Starbucks (SBUX) - Get Starbucks Corporation Report as their top restaurant pick for 2017. The firm pointed to easier sales comparisons this year that could entice investors back to the stock.
Shares of General Motors (GM) - Get General Motors Company Report rose after falling in premarket trading after President-elect Donald Trump slams the automaker for manufacturing its Cruze vehicle in Mexico, demanding payment of a "big border tax" on imports.
Depomed (DEPO) surged 9% on reports KKR is seeking a potential acquisition. Final bids for the company will be received by Wednesday.
Abercrombie& Fitch (ANF) - Get Abercrombie & Fitch Co. Class A Report moved 2.5% lower after a series of downgrades. Oppenheimer reduced its rating to underperform and Jeffries cut to hold from buy. The apparel retailer slumped more than 50% over 2016.
Xilinx (XLNX) - Get Xilinx, Inc. Report was downgraded to reduce from neutral at Nomura. The firm said its valuation was less attractive as the company is valued at 26 times expected earnings. The stock declined 1.3%.