MARKET SNAPSHOT: U.S. Stocks Rise; Michael Kors, Yum Brands Climb

By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks closed with modest gains on Tuesday, clawing back a fraction of their worst losses since June made a day earlier.

Investors welcomed a smaller-than-expected drop in factory orders during December. The stock market had slumped Monday after disappointing manufacturing data on the heels of an emerging-markets rout stoked fears over a possible slowdown in the U.S. economy.

The S&P 500 (SPX) closed 13.31 points, or 0.8%, higher at 1,755.20, a day after sliding 2.3%. The Dow Jones Industrial Average (DJI) rose 72.44 points, or 0.5% to 15,445.24.

The Nasdaq Composite (RIXF) ended 34.56 points, or 0.9% higher at 4,031.52.

Read the recap of our stock market live blog.

"A 3.5% drop in one month is not something to worry about. Since 2009, we had one monthly loss for every three gains, said Frank Fantozzi, president and founder of Planned Financial Services.

"We advise our clients to allocate more money to emerging markets, which look cheap at the moment and to U.S. stocks, as we believe the big macro picture remains intact," he added.

The economic calendar will get busier, beginning with the ISM services index and ADP jobs reports on Wednesday and ending with the closely watched nonfarm-payrolls report on Friday.

In earnings news, Michael Kors (KORS) shares soared 17.3% after the firm reported stronger-than-expected third-quarter earnings and raised its per-share earnings guidance.

J.C. Penney (JCP) reported a 2% increase in same-store sales for the fourth quarter, marking the first time since the second quarter of 2011 that the retailer has generated a positive quarterly sales result. However, some analysts said the results were "not good enough," and shares tanked 10.6%.

Yum Brands Inc. (YUM) rallied 8.9% after the parent company of KFC, Taco Bell and Pizza Hut said late Monday its fourth-quarter earnings fell. However, the company's adjusted earnings per share were better than projected in a FactSet survey.

Archer Daniels Midland Co.'s (ADM) fourth-quarter adjusted earnings beat expectations. But shares gave up earlier gains and closed 1.8% lower.

Shares of Microsoft Corp. (MSFT) closed slightly lower the day the software giant had named Satya Nadella, head of the company's cloud and enterprise business, as its new chief executive officer.

In other financial markets, European stocks fell for a third-straight day, while Asian bourses closed in the deep red. Oil rebounded ahead of inventory data, while gold moved lower. In currencies, the Australian dollar climbed against the U.S. dollar after the country's central bank indicated it is no longer leaning toward cutting interest rates.

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