US stocks ended higher on Tuesday, snapping the S&P 500's three-day losing streak to give the benchmark index its first positive session of 2014.
A sharp decline in the US trade deficit and upbeat German data helped improve market sentiment as the data pointed to strengthening economic fundamentals in both the United States and Europe.
"One way or the other, (the data) is all pointing to the story about how it might still be tough, but things are starting to point to better days ahead," said Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York.
"Overall, if you look at the broader picture, it does feel like it means it is starting to move ahead."
The S&P healthcare index, up 1 percent, was the best performer among the 10 major S&P sectors, buoyed by a Deutsche Bank upgrade of UnitedHealth Group Inc to a "buy." Shares of UnitedHealth, a Dow component, gained 3.1 percent to close at USD 76.51. Tenet Healthcare shares climbed 4.9 percent to USD 46.10.
Community Health Systems Inc shares rose 3.8 percent to USD 43.49 a day after the company said the new US healthcare law should give a slight boost to its 2014 earnings.
The S&P 500's gains followed a three-day losing streak, which pushed the benchmark index down more than 1 percent as traders took profits in the wake of 2013's rally that drove the benchmark index up nearly 30 percent.
Data showed US exports hit a record high in November, while weak oil prices restrained import growth, resulting in the smallest US trade deficit in four years. German unemployment unexpectedly fell in December on a seasonally-adjusted basis.
The Dow Jones industrial average rose 105.84 points or 0.64 percent, to end at 16,530.94. The S&P 500 gained 11.11 points or 0.61 percent, to finish at 1,837.88. The Nasdaq Composite added 39.501 points or 0.96 percent, to close at 4,153.182.
Shares of Google Inc hit a record intraday high of USD 1,139.69 before closing up 1.9 percent at USD 1,138.86. JPMorgan, which has an "overweight" rating on Google, raised its target price on the stock to USD 1,305 from USD 1,100.
Economic activity may be hurt by a polar vortex - strong upper-level winds in the Northern Hemisphere that normally hover over the polar region - that has been pushed south to envelop a large part of the United States.
JPMorgan Chase & Co shares fell 1.2 percent to USD 58.32 after the largest US bank holding company said it would pay more than USD 2 billion of penalties to settle charges by US federal authorities that it failed to report suspicious activity involving Bernard Madoff's Ponzi scheme.
GameStop Corp shares plunged 8.4 percent to USD 44.14, its biggest drop since May 2013, and ranked as the S&P 500's worst performer after Sony Corp said it will begin testing a new PlayStation-based streaming service that could cut into the video game retailer's used game sales. US-listed shares of Sony edged up 0.1 percent to USD 17.32.
In the pharmaceutical space, Neurocrine Biosciences soared 89.7 percent to USD 18.51, its highest level since June 2006, a day after it said its movement disorder drug showed a reduction in symptoms compared with a placebo in a mid-stage study.
Stereotaxis shares jumped 12.5 percent to USD 4.50 following completion of a clinical trial. The Nasdaq biotech index gained 1.4 percent.
Bob Doll, chief equity strategist of Nuveen Asset Management, forecast further upside for equities in 2014, with a year-end target of 1,950 for the S&P 500. But he expects stocks to endure a 10 percent correction during the year.
Volume was modest, with about 6.11 billion shares traded on US exchanges, slightly above the 6.01 billion average so far this month, according to data from BATS Global Markets.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 2 to 1, while on the Nasdaq, nine stocks rose for every four that fell.
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