NEW YORK - It's the best start for stocks in 15 years.
In what was mostly a slow and steady climb, the Dow Jonesindustrial average rose 3.4 percent in January and the Standard &Poor's 500 gained 4.4 percent, the best performances for bothindexes to open a year since 1997.
Investors were encouraged by modest but welcome improvement inthe U.S. economy, including an 8.5 percent unemployment rate, thelowest in almost three years. Corporate profits didn't wow anyone -except Apple's - but they were good enough.
"I don't see anything really glamorous or tremendous about theeconomy or earnings," said Jerry Harris, chief investment strategistat the brokerage Sterne Agee. "But I think they're very acceptable,and things are grinding along."
An unexpected drop in consumer confidence dragged stocks down onthe final day of the month. The Dow Jones industrial averagefinished down 20.81 points, or 0.2 percent, at 12,632.91.
The broader market fared better. The S&P barely finished in thered, declining 0.60 point to 1,312.41. The Nasdaq composite indexrose 1.90 points to close at 2,813.84. The Nasdaq gained 8 percentfor the month, its best January since 2001.
In January 1997, the last time stocks had such a fast start, theS&P gained 6.1 percent. Bill Clinton was inaugurated for his secondterm. An Asian financial crisis and "Titanic" lay ahead. Later thatyear, the Dow crossed 7,000 and 8,000 for the first time.
This January, analysts said, investors had such low expectationsfor the economy that it was easy for things to turn out better thanexpected.
"There are no big surprises," said Kim Caughey Forrest, a seniorequity analyst at money manager Fort Capital Group. "That's the kindof ho-hum economy that we are in right now."
The Dow closed at 12,217.56 at the end of last year, then startedthis year with a pop - a gain of 179.82 points on opening day. Itwas the kind of big swing investors became accustomed to in 2011.
Since then, it's been a quiet ascent: 19 days in a row of movesof less than 100 points. The last time the Dow had such a placidstretch was a 34-day run that started Dec. 3, 2010.
Scottrade, the online brokerage, said stock buyers outpacedsellers among its clients for the first 14 trading days of the year,Jan. 3 to Jan. 23.
It also said volume was 16 percent higher than December'saverage.
On Tuesday, the Dow started up 66 points after encouraging signsfrom Europe that Greece might finally complete a deal to cut itscrushing debt, a step toward securing a critical (euro) 130 billionbailout payment.
Greece is negotiating with investors who bought its governmentbonds. They are expected to swap their bonds for new ones with halfthe face value, plus a lower interest rate and longer term ofmaturity.
Investors are increasingly worried that Portugal may need asimilar deal with its private creditors. European leaders insist theGreek reduction is a one-time event. Portugal's borrowing costs haverisen to record highs.
The Dow lost its gains after consumer confidence fell to 61.1 inJanuary, down from 64.8 in December. Economists had expected 68. TheConference Board said Americans are more worried about theirincomes, gas prices and business conditions.
There were also signs that the housing market continues tostruggle. Home prices fell in November for a third straight month in19 of the 20 cities tracked by the S&P/Case-Shiller index. Thebiggest declines were in Atlanta, Chicago and Detroit.
In the commodities market, investors worried that the confidencefigure was a sign of weaker demand to come, and they sold industrialmetals that have prices closely tied to the economy.
Copper for March delivery dropped 3.65 cents to $3.79 per pound,and March palladium ended down $2.15 at $686.35 per ounce. Aprilplatinum fell $28.20 to $1,588.10 an ounce.
The metals ended the day down after wild swings. Traders bid upprices in morning trading, encouraged by news that Europeanofficials were making progress to contain the financial crisisthere, then sold hard on the confidence number.
"This is a day that every trader takes Tums," said George Gero,vice president at RBC Global Futures.
Precious metal prices ended the day mixed. The price of goldrose, as it often does when it looks like the economy might shrinkor the dollar might lose its value. Gold for April delivery gained$6 to finish at $1,740.40 an ounce.
In the bond market, the weak U.S. economic data and uncertaintyabout Greece lit up demand for safe investments. The benchmark 10-year Treasury yield dipped below its lowest closing level in nearlyfour months.
The yield on the five-year Treasury note hit a record low for thesecond straight day, falling to 0.71 percent.
Treasury yields have been falling since last week, when theFederal Reserve said it expected to hold interest rates near zerointo late 2014, more than a year longer than its last estimate,because the economic recovery will need help.
In corporate news:
- RadioShack Corp. stock plummeted 30 percent after the companysaid its profit fell sharply - 11 cents to 13 cents per share forthe quarter that ended in December, down from 51 cents a yearearlier and less than half what Wall Street was expecting.
- Best Buy Co. Inc., one of RadioShack's competitors, respondedby falling 5.6 percent, worst in the S&P. Both companies sell andservice cellphones, but demand has softened at their stores.
- Avery Dennison Corp., which makes labels and packagingmaterials, fell 5.6 percent after it said earnings plunged 81percent on nearly flat sales. Its 2012 outlook was well below WallStreet expectations.
- Mattel Inc. soared 5 percent because of strong demand forBarbie and Monster High dolls during the holidays. That boostedMattel's fourth-quarter profit by a better-than-expected 14 percent.The company also raised its dividend.
- U.S. Steel Corp. gained 5 percent after it reported strongdemand for pipes from the oil industry from October throughDecember. The company was also optimistic about this quarter.
- Agriculture conglomerate Archer Daniels Midland declined 4.6percent after it reported an 89 percent drop in quarterly netincome. The company said its results were weighed down by weaknessin oilseeds, corn processing and agricultural services.
