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U.S. Stocks Kick Off 2018 With Gains

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01/02/2018 | 05:32pm CET
By Christopher Whittall and Akane Otani

Technology shares jumped in the first trading session of 2018, pulling major U.S. stock indexes higher.

The Dow Jones Industrial Average climbed 67 points, or 0.3%, to 24786 on Tuesday after notching its second biggest yearly gain of the past decade. The S&P 500 rose 0.7% and the Nasdaq Composite added 1.2%.

Many investors head into 2018 confident that the yearslong market rally can continue amid a strengthening global recovery and corporate earnings growth. Soaring stock prices added more than $9 trillion in market value to equity markets in 2017.

Those steep gains have made some investors cautious. But many investors and analysts are penciling in further stock price rises in 2018 thanks to firming global growth.

"We'd expect the global expansion to continue and drive equities to new highs in the process," said Shoqat Bunglawala, head of the global portfolio solutions group for EMEA at Goldman Sachs Asset Management.

Mr. Bunglawala added that he expects stock gains "to moderate given the strong pace we've seen recently" and to be punctuated with short periods of volatility as the Federal Reserve continues to raise interest rates.

Shares of technology companies rallied Tuesday, lifting the Nasdaq past the S&P 500 and Dow industrials. Alphabet shares jumped 1.7% while Corning rose 1.7% and Activision Blizzard added 1.6%.

Government bonds and their stock-market proxies pulled back.

The yield on the benchmark 10-year U.S. Treasury note rose to 2.458%, according to Tradeweb, compared with 2.409% on Friday. Yields rise as bond prices fall.

Shares of utilities companies, which many investors consider bondlike because of their hefty dividends, fell 0.7% in the S&P 500, among the biggest decliners of the broad index's 11 sectors.

Meanwhile, analyst upgrades helped push shares of consumer-discretionary companies higher.

Nordstrom jumped 4.4% after J.P. Morgan analysts upgraded their rating for the stock to neutral from underweight, while Netflix climbed 4.2% after Macquarie bumped up its rating for the stock to outperform from neutral.

Elsewhere, the Stoxx Europe 600 slipped 0.3%, dragged down by declines in real-estate stocks.

Hong Kong's Hang Seng Index rose 2%, thanks in part to advances by Chinese messaging-and-gaming heavyweight Tencent Holdings Ltd. Tech stocks broadly notched gains after suffering steep declines last year amid a global pullback from the sector.

Solid Chinese manufacturing data showed the sector remained healthy, said Krystal Tan of Capital Economics. Global economic growth "and accommodative domestic monetary policy should help keep Asian manufacturing sectors in good shape," she said.

China's Shanghai Composite Index rose 1.2%, while markets in Japan were closed.

The U.S. dollar started 2018 as it ended last year -- lower. The WSJ Dollar Index, a measure of the U.S. currency against a basket of 16 others, fell 0.3% Tuesday.

Kenan Machado contributed to this article

Write to Christopher Whittall at [email protected] and Akane Otani at [email protected]

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