US stocks inaugurated 2007 with strong gains today after a drop in oil prices and a stronger-than-expected reading in the manufacturing index sparked optimism about the economy and corporate profits.
The view that moderate economic growth would give the Federal Reserve little impetus to cut interest rates sent bond prices lower, erasing early gains. The dollar, meanwhile, rallied to two-month highs.
Oil prices fell as mild weather in the US northeast cut demand for fuel in the world's biggest heating oil market.
US crude fell $2.41 to $58.65 a barrel.
The Dow Jones industrial average was up 104.38 points, or 0.84 percent, at 12,567.53. The Standard & Poor's 500 Index was up 8.82 points, or 0.62 percent, at 1,427.15. The Nasdaq Composite Index was up 34.78 points, or 1.44 percent, at 2,450.07.
Shares of retailers Wal-Mart and Home Depot led gains. Shares of Wal-Mart rose after the world's largest retailer estimated over the weekend that its December same-store sales rose more than it had expected in the crucial holiday shopping period.