MARKET SNAPSHOT: Stocks Jump; Dow Boosted By UnitedHealth

By Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks rallied on Tuesday, as the S&P 500 index worked to snap the three-day losing streak that it has endured at the start of 2014.

Firmer overseas markets helped sentiment, and traders also absorbed a drop in the U.S. trade deficit and a Federal Reserve official calling for gradual stimulus reduction.

The S&P 500 (SPX) gained 11 points, or 0.6%, to 1,838, climbing back toward its record closing level of 1,848.36 hit Dec. 31.

The Dow Jones Industrial Average (DJI) rose 118 points, or 0.7%, to 16,543, boosted by a 2.5% jump by UnitedHealth Group Inc.(UNH) after Deutsche Bank upgraded the company on Tuesday to buy from hold. The blue-chip index is nearing its own Dec. 31 record close of 16,576.66.

The Nasdaq Composite (RIXF) tacked on 31 points, or 0.7%, to 4,144.

Many strategists say the new year's weak start shouldn't have been surprising given the S&P 500's 29.6% advance in 2013.

"It seems like everyone is up in arms about a 1% pull in after an almost 30% gain last year, but to me it looks like pretty normal action," said Scott Redler, chief strategist at T3 Live and T3 Trading Group, in emailed comments early Tuesday. "Most world markets that ran higher the last 8-10 sessions of 2013 are experiencing some profit-taking."

* Today's economic news: The U.S. trade deficit fell to $34.3 billion in November, the Commerce Department said on Tuesday. That was a steeper-than-expected drop and could signal a stronger economy. Meanwhile, Boston Fed President Eric Rosengren said the central bank should only wind down its bond-buying program gradually. San Francisco Fed President John Williams will talk about the economy and monetary policy in Phoenix, at 2:10 p.m. Eastern time.

* What strategists are saying: This week, investors likely will pay the most attention to Friday's jobs report and Wednesday's release of minutes from the Fed's Dec. 18 meeting, where the central bank decided to taper its bond-buying program that's boosted stocks. The minutes could "certainly elevate the volatility in the market, perhaps the most, as compared with other economic events which are due this week," said Naeem Aslam, chief market analyst at Ava Trade, in emailed comments. He said the jobs report also will have "utmost importance" as "further tapering will largely depend on this gauge."

* Today's movers and shakers: Netflix Inc. shares fell 4% after Morgan Stanley cut the video-streaming company to underweight from equal weight. Shares in Humana Inc. dropped 1% after Deutsche Bank downgraded the health insurer to sell from hold. Read more in the Movers & Shakers column.

* Other markets:European stocks pushed higher Tuesday after the annual rate of euro-zone inflation fell further below the European Central Bank's target in December. That triggered some deflation concerns, but analysts also said it could put pressure on the ECB to respond with stimulus measures. Asian stocks mostly rose, while the dollar was little changed, gold fell and oil rose.

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