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US stocks begin 2017 with gains after three-day losing streak


The stock market opened the year on a strong note, led by big gains in banks and energy companies (AP)

The stock market opened the year on a strong note, led by big gains in banks and energy companies (AP)

The stock market opened the year on a strong note, led by big gains in banks and energy companies (AP)

US stocks have broken a three-day losing streak and ushered in the new year with broad gains.

Health care stocks, which struggled for most of last year, climbed as the Dow Jones industrial average saw a rise of 175 points in the first hour of trading.

Bond yields jumped, which took bank stocks higher.

The price of oil also rose early on, but it began slipping in mid-morning. Investors started buying again late in the day, however, and major indexes closed with a flourish.

Energy companies, banks and technology companies made some of the largest gains and lower-risk investments like utility companies lagged the rest of the market.

This has been interpreted as a sign investors expect stronger economic growth.

"Corporate earnings are telling us that it's a bull market," said Karyn Cavanaugh of Voya Investment Strategies, who added that earnings and revenues look "very good" for 2017.

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The Dow Jones industrial average jumped 119.16 points, or 0.6%, to 19,881.76. The Standard & Poor's 500 index rose 19 points, or 0.8%, to 2,257.83. The Nasdaq composite gained 45.97 points, or 0.9%, to 5,429.08.

The Russell 2000 index, which tracks small-company stocks, added 8.36 points, or 0.6%, to 1,365.49. The Russell rose almost 20% last year and performed far better than indexes focused on larger companies.

Drug companies helped take health care stocks higher. Merck rose 1.28 dollars (£1), or 2.2%, to 60.15 dollars (£49). Biotech giant Amgen picked up 4.52 dollars (£3.66), or 3.1%, to 150.73 dollars (£122), and prescription drug distributor McKesson gained 6.98 dollars (£5.65), or 5%, to 147.43 dollars (£119.50).

The S&P 500's health care index fell 4% last year. The S&P 500 itself rose 9.5% for the year and all of its other industrial sectors rose at least a small amount.

Investors have been avoiding drug company stocks because they are worried the government will intervene to reduce prices. But Ms Cavanaugh said the stocks are appealing because they have been reporting better growth than most other industries.

"If you look at earnings and revenues, they're one of the leaders," she said.

Xerox surged 1.14 dollars (92p), or 19.8%, to 6.89 dollars (£5.58) after it split itself in two, a move the company announced almost a year ago. The original Xerox kept its printer and copier business. The second company will focus on business process outsourcing, providing payment processing and other services. Xerox will receive 1.8 billion dollars (£1.45 billion) in cash.

The new company, Conduent, now trades under the ticker symbol CNDT. That stock lost 1.18 dollars (95p), or 7.9%, to 13.72 dollars (£11.12).

Oil prices jumped in early trading but turned around to finish lower. US crude gave up 1.39 dollars, or 2.6%, to 52.33 dollars a barrel in New York. Brent crude, used to price international oils, skidded 1.35 dollars, or 2.4%, to 55.47 dollars a barrel in London.

Despite that slump, energy companies traded higher. But natural gas companies dropped as natural gas futures dropped 40 cents, or 10.7%, to 3.33 dollars (£2.69) per 1,000 cubic feet. Southwestern Energy lost 85 cents, or 7.9%, to 9.97 dollars (£8) and Cabot Oil & Gas gave up 1.02 dollars (82p), or 4.4%, to 22.34 dollars (£18.10).

Bond prices fell slightly. The yield on the 10-year Treasury note rose to 2.45% from 2.43% late on Friday. Yields made a much bigger move earlier in the day.

Utility companies fell Tuesday, and real estate investment trusts and companies that sell household goods rose less than the rest of the market. Those stocks are often compared to bonds because they pay large dividends, but the jump in yields on Tuesday encouraged investors to look elsewhere.