U.S. stocks surge on market optimism; Dow Jones jumps 1.92%

Investing.com - U.S. stocks were sharply higher on Tuesday, on the first trading day of the New Year as risk sentiment strengthened after positive manufacturing data from China and ahead of a U.S. report on manufacturing activity.

During early U.S. trade, the Dow Jones Industrial Average surged 1.92%, the S&P 500 index jumped 1.80%, while the Nasdaq Composite index climbed 2.15%.

Sentiment was boosted after data showed that Chinese manufacturing activity returned to expansionary territory last month after contracting in November, easing concerns over a slowdown in the world’s second largest economy.

But investors remained cautious as the threat of sovereign debt downgrades across the euro zone lingered, while markets eyed bond auctions by Germany and France later in the week to gauge borrowing conditions in the region.

U.S. lenders led gains, tracking their European counterparts sharply higher as shares in Citigroup surged 4.90% and Bank of America jumped 4.14%, while JPMorgan and Goldman Sachs soared 3.43% and 2.95% respectively.

Energy stocks also contributed to gains with Chesapeake Energy climbing 2.20% after selling a stake in a shale gas project to French oil giant Total for USD2.3 billion. Chevron shares were up 2.87% and Exxon Mobil advanced 1.55%.

Meanwhile, British Petroleum soared 2.50% on news the company plans to sue contractor Halliburton to recover cleanup costs related to the massive 2010 Gulf of Mexico oil spill.

Boeing jumped 2.11% after winning a USD3.5 billion missile contract from the U.S. Defense Department, beating out rival Lockheed Martin, whose shares were up 1.64%.

Elsewhere, Teva Pharmaceuticals saw shares surge 4.66% on news that its CEO Shlomo Yanai will retire in May and will be succeeded by Bristol-Myers Squibb executive Jeremy Levin.

Starbucks gained 1.43% after the coffeehouse chain said it is raising prices by an average of about 1% in the U.S. Northeast and Sunbelt regions.

Across the Atlantic, European stock markets were mixed. The EURO STOXX 50 rose 0.27%, France’s CAC 40 eased 0.06%, Germany's DAX jumped 1.33%, while Britain's FTSE 100 surged 1.70%.

During the Asian trading session, Hong Kong's Hang Seng Index rallied 2.4%, while Japan’s Nikkei 225 Index remained closed for the extended New Year's holiday.

Later in the day, the U.S. Institute of Supply Management was to publish a report on manufacturing activity and the Federal Reserve was to publish the minutes of its December policy meeting.