Dow starts the year strong with a surge of 180 points

The stock market rose sharply Tuesday in the first trading of 2012 after investors returned from the holiday and found encouraging economic reports from the United States and around the world.

The Dow Jones industrial average rose 179.82 points, or 1.4 percent, to 12,397.38, its highest close in more than five months.

The Standard & Poor’s 500 index, a broader gauge than the Dow, finished up almost 20 points at 1,277. The S&P had finished 2011 almost exactly where it started.

The market may have gotten an extra boost from what’s known as the January effect: Investors sell stocks at the end of the year to lock in losses for tax purposes, then come back in January and buy stocks again. The effect could be more pronounced this year because the stock market was so volatile in 2011 and more investors had losses to take, said Sam Stovall, chief equity strategist at Standard & Poor’s Capital IQ.

Money managers also usually get a fresh infusion of cash at the beginning of the year because workers who maxed out their contributions to retirement accounts well before the previous year ended start contributing again.

January is a fairly good predictor of the year for U.S. stocks. Only seven times since 1950 has January turned out to be a “major error” in predicting the year to come, according to the Stock Trader’s Almanac.


Maine heating oil prices dip to average of $3.56 a gallon

Maine’s heating oil prices are holding steady.

The Governor’s Office of Energy Independence and Security said the average statewide price Tuesday was $3.56 a gallon, down a penny from a week ago. Prices were lowest in southern Maine and highest in northern Maine.

Since Halloween, heating oil prices have ranged by only 10 cents a gallon, between an average of $3.56 and $3.66 a gallon.

Kerosene on Tuesday was selling for an average of $3.97 a gallon, down a penny from last week. Propane was selling for $3.14 a gallon, up 2 cents a gallon.


Fed’s plans for interest rates to be shared 4 times a year

In a major shift, the Federal Reserve will start announcing four times a year how long it plans to keep short-term interest rates at current levels, according to minutes from its December policy meeting.

The change is intended to reassure consumers and investors that they will be able to borrow cheaply well into the future. And some economists said it could lead to further Fed action to try to invigorate the economy.

The shift marks the Fed’s latest effort to make its communications with the public more open and explicit. Its first forecast for interest rates will be included in the economic projections to be issued after its Jan. 24-25 policy meeting.

The Fed has left its key short-term rate at a record low near zero for three years. In August, it said it plans to leave the rate there until at least mid-2013, unless the economy improves.