Dow Drifts Higher, Led by Rallying Alcoa Shares

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The blue chips advanced on Monday, helped by jumping Alcoa shares as traders bid up the aluminum giant ahead of its earnings release after the closing bell.

Today's Markets

The Dow Jones Industrial Average rose 32.8 points, or 0.27%, to 12393, the S&P 500 gained 2.9 points, or 0.23%, to 1281 and the Nasdaq Composite climbed 2.9 points, or 0.23%, to 2677.

The markets kicked off the second trading week of 2012 in positive territory, following last week's rally.

Earnings season unofficially starts after the closing bell on Monday, with Alcoa's (NYSE:AA) report. The biggest U.S. aluminum maker said earlier in the day it will slash its global smelting capacity by 12%, potentially affecting up to 1,500 workers. The company's stock price climbed close to 3% on the day prior to the release, posting the best performance of the 30 Dow components.

Caterpillar (NYSE:BAC), the heavy machinery maker, and Bank of America (NYSE:BAC) also performed solidly on the day. However, Microsoft (NASDAQ:MSFT) and McDonald's (NYSE:MCD) lagged behind, performing the worst out of the blue chips.

With the economic calendar fairly light on the day, Europe's twin debt and banking crises have taken the spotlight as well. German Chancellor Angela Merkel and French President Nicolas met in Berlin to discuss a plan crafted last month to push for closer fiscal ties among members of the euro zone ahead of a European Union summit on January 30.

The two leaders said discussions on the fiscal pact are moving along well, without providing many specific details, according to Dow Jones Newswires. Additionally, Sarkozy did not provide comment on speculation France may see its pristine credit rating cut, the report from Dow Jones said.

Leaders have been attempting to keep the two-year-old debt crisis from worsening, but its affects can already be seen across several markets. Italy's 10-year bonds recently yielded 7.12%, meaning Europe's third-biggest economy may be forced to pay hefty borrowing costs as it tries to refinance billions of euros in debt this year.

The euro, meanwhile, has been hovering about its lowest levels since September 2010. The single currency recently climbed 0.43% to $1.2771. The dollar fell 0.92% against six trading partners.

On the economic front, the Federal Reserve said on Monday consumer credit expanded at the swiftest pace in November since 2001. Credit grew at a rate of $20.37 billion, blowing by forecasts of a $7 billion gain.

"Consumer credit growth is a positive sign for the recovery in that it signals increasing demand and willingness to spend," Paul Edelstein, director of financial economics at IHS Global Insight wrote in a research note. Edelstein adds that while the data are generally positive, there remains a risk that at least part of the increase is due to some Americans burning through their savings and relying on borrowing to finance themselves.

Energy futures were mixed. The benchmark crude oil contract traded in New York fell 25 cents, or 0.25%, to $101.31 a barrel. Wholesale RBOB gasoline rose 0.27% to $2.759 a barrel.

In metals, gold slipped $8.60, or 0.53%, to $1,608 a troy ounce.

Foreign Markets 

European blue chips fell 0.53%, the English FTSE 100 dipped 0.66% to 5,612 and the German DAX slipped 0.31% to 6,017.

In Asia, the Japanese Nikkei 225 sold off by 1.2% to 8,390 and the Chinese Hang Seng rallied 1.5% to 18,866.