MARKET SNAPSHOT: Stocks Rally As S&P 500 Scores First Gain In 2014

By Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks rallied on Tuesday, helped by data showing a smaller-than-expected trade gap and gains by health-care stocks following an upgrade for UnitedHealth Group Inc.

Firmer overseas markets also provided a lift, and traders absorbed largely encouraging comments from Federal Reserve officials.

The S&P 500 (SPX) gained 11.11 points, or 0.6%, to close at 1,837.88, snapping the three-day losing streak that it endured at the start of 2014. The benchmark index climbed nearer to its record closing level of 1,848.36 hit on Dec. 31.

The Dow Jones Industrial Average (DJI) rose 105.84 points, or 0.6%, to end at 16,530.94. UnitedHealth Group Inc. (UNH) performed best among Dow components and provided a boost to the blue-chip index after Deutsche Bank upgraded the company on Tuesday to buy from hold. The Dow moved near to its own Dec. 31 record close of 16,576.66.

The Nasdaq Composite (RIXF) advanced 39.50 points, or 1%, to finish at 4,153.18.

Tuesday's trade report made some strategists more optimistic about U.S. economic growth.

"The U.S. trade deficit is the arcane statistic to watch in 2014, and it opened with a positive whammy, decreasing by 13% from a revised down deficit last month," said strategists at ING Investment Management in a note on Tuesday.

"This is a direct benefit to top line GDP growth, and we can expect positive surprises here as well. So while the S&P 500 began the year with a rough start, it looks like the economy is doing just fine."

Check out MarketWatch's live blog recap of Tuesday's stock-market action

* 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 said the Fed likely will end its bond buys this year, adding that he sees "newfound momentum" in the economy.

* What strategists are saying: "As a whole, the November trade report adds upside risk to our [fourth-quarter] GDP forecast and it now looks like [fourth-quarter] real GDP growth is tracking closer to 3.0% than the current 2.5% forecast," said Daniel Silver, a J.P. Morgan economist, in a note on Tuesday. But overall 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 buys. Earnings season also unofficially kicks off Thursday.

* Today's movers and shakers: Shares in retailer GameStop Corp. lost 8.4% on news of another way to buy video games, while Netflix Inc. fell 5.6% after Morgan Stanley cut the video-streaming company to underweight from equal weight. 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 closed mostly higher, while gold fell, but the dollar rose and oil futures snapped a five-session losing streak.

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