By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Dow takes aim at 20,000
U.S. stocks advanced modestly on Monday as investors appeared reluctant to make big bets in a preholiday week while the main benchmarks were sitting near all-time highs set last week.
After a mild knee-jerk reaction to news of the assassination of the Russian ambassador to Turkey, markets resumed their climb.
A gunman killed Russia's envoy to Turkey, Ambassador Andrey Karlov, on Monday during a gallery in Ankara. Russia's foreign ministry classified the shooting as a terrorist attack.
Read: Russian ambassador to Turkey is shot dead (http://www.marketwatch.com/story/russian-ambassador-to-turkey-is-shot-2016-12-19-12103737)
The Dow Jones Industrial Average was trading up 35 points, or 0.2%, at 19,876, struggling to break the psychologically important 20,000 level.
The blue-chip index has outperformed other benchmarks year to date, up 14% after marking the longest weekly run of gains since November 2015 last week.
The S&P 500 index was up 3 points, or 0.1% at 2,261, with seven of the 11 main sectors trading higher. Telecom shares were leading gains, up 1.2%, followed by real estate and technology sectors, up about 0.9%. Energy shares, which are among the best performers this year, pulled back about 0.4%.
Meanwhile, the Nasdaq Composite Index added 20 points, or 0.4% to 5,456.
"Markets handled today's geopolitical event of [shooting of the Russian ambassador] pretty well, which shows there very little fear among investors," said Peter Cardillo, chief market economist at First Standard Financial.
The VanEck Vectors Russia ETF (RSX) fell 0.3% after the news, while the iShares MSCI Turkey ETF(TUR) sank 2.1%. Turkish lira fell 0.7%, with buck buying 3.5317 lira on Monday, the currency's weakest level in history.
Cardillo warned that very low levels of volatility are a sign of extreme complacency that tend to precede pullbacks.
The CBOE Volatility Index , which measures implied volatility on the S&P 500, fell 3.4% to 11.78, its near its lowest this year.
"The stock market reached a point where it needs to consolidate before it can move higher, both on technical and fundamental basis. Companies will have to show earnings growth to justify the recent rally," Cardillo said.
Some technical analysts also suggested that a two-month rally on Wall Street has been overdone.
"Short-term overbought conditions are likely to lead to a pullback in the weeks ahead," wrote Katie Stockton, chief technical strategist at BTIG, implying that the market's euphoria has driven stocks too far, too fast and that patience in adding to exposure to large-cap stocks is needed.
In her first speech after raising interest rates for only the second time this decade, Federal Reserve Chairwoman Janet Yellen said signs of a healthy job market abound, including steady job creation, low layoff rate and higher job openings. But Yellen also noted the economy is growing more slowly than in past recoveries and productivity growth "has been disappointing."
Some still believe the stock markets may not get a so-called Santa Claus rally (http://www.marketwatch.com/story/why-the-stock-market-may-not-see-a-santa-rally-this-year-2016-12-17) in the last trading days of 2016 because of the intensity of its recent rise.
Stocks to watch: Canada-based insurer Fairfax Financial Holdings Ltd.(FFH.T) has agreed to acquire (http://www.marketwatch.com/story/insurer-fairfax-agrees-to-buy-allied-world-in-49-billion-deal-2016-12-19) Swiss peer Allied World Assurance Co.(AWH) in a $4.9 billion cash-and-share deal. Fairfax shares fell 2.3%, but Allied shares jumped 12%.
Standard Industries Inc. on Sunday reached an agreement (http://www.marketwatch.com/story/standard-industries-to-buy-german-roof-maker-braas-monier-for-115-billion-2016-12-18) to buy German roof maker Braas Monier Building Group SA(BMSA.FF). Standard is the U.S.-based owner of North America's biggest roof maker, GAF Materials Corp. Braas shares rose 6.8%.
Walt Disney Co.(DIS) was up 1.7% after "Rogue One: A Star Wars Story" hauled in an estimated $155 million (http://www.marketwatch.com/story/rogue-one-has-a-blockbuster-opening-weekend-2016-12-18) in the U.S. and Canada at the box office over the weekend. The takings were the second biggest ever for a December opening.
Lennar Corp.(LEN) reported an 11% jump in fourth-quarter profit (http://www.marketwatch.com/story/lennar-profit-jumps-11-in-q4-beats-forecasts-2016-12-19), beating forecasts. Shares advanced 2.8%.
Iran officials warned on Sunday that if U.S. President-elect Donald Trump tries to scuttle the country's deal to buy 80 jets from Boeing Co (http://www.marketwatch.com/story/iran-warns-it-will-seek-payments-if-trump-scuttles-boeing-deal-2016-12-18).(BA) it will take action to recover lost payments. Boeing shares rose 1.1%.
Other markets: Asian markets closed mostly lower, while European stocks pulled back from 2016 highs (http://www.marketwatch.com/story/european-stocks-drop-from-2016-high-as-banks-pause-for-breath-2016-12-19) as banks took a breather from a recent rally.
Crude prices (http://www.marketwatch.com/story/oil-prices-start-the-new-week-with-gains-and-a-focus-on-production-cuts-2016-12-19) inched higher, trading up 0.4% at $53.13 a barrel, while gold for February added $2 to $1,139 an ounce.
The dollar (http://www.marketwatch.com/story/dollar-slips-as-investors-cash-in-on-recent-gains-2016-12-19) index pulled back modestly, as investors took a pause after gains of about 1.2% last week that came on the heels of the Fed's rate increase.
--Additional reporting by Ryan Vlastelica
(END) Dow Jones Newswires
December 19, 2016 15:07 ET (20:07 GMT)
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