By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Dow inches closer to the 20,000 milestone
U.S. stocks advanced tepidly on Monday with investors somewhat reluctant to make big bets in a preholiday week while the main benchmarks were sitting near all-time highs set last week.
Trading volumes were thinner than usual, with the New York Stock Exchange reporting volume at 60% of the 30-year average, according to FactSet.
After a mild knee-jerk reaction to news of the assassination of the Russian ambassador to Turkey, markets resumed their climb to close modestly higher.
A gunman killed Russia's envoy to Turkey, AmbassadorAndrey Karlov, on Monday at 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 finished up 39.65 points, or 0.2%, at 19,883.06, struggling to break the psychologically important 20,000 level.
The blue-chip index has outperformed other benchmarks year to date, up 14.1% after marking the longest weekly run of gains since November 2015 last week.
The S&P 500 index closed up 4.46 points, or 0.2% at 2,262.53, with eight of the 11 main sectors finishing in positive territory. Telecom shares led the gainers, up 1.1%, followed by real estate and technology sectors, up about 1% and 0.6%, respectively. Energy shares, which are among the best performers this year, pulled back about 0.5%.
Meanwhile, the Nasdaq Composite Indexended the session higher, up 20.28 points, or 0.4% to 5,457.44.
"Markets handled today's geopolitical event [the shooting of the Russian ambassador] pretty well, which shows there is very little fear among investors," said Peter Cardillo, chief market economist at First Standard Financial.
The VanEck Vectors Russia ETF (RSX) fell 0.6% after the news, while the iShares MSCI Turkey ETF(TUR) sank 2.2%. Turkish lira fell 0.7%, with a buck buying 3.5300 lira on Monday, near 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, near its lowest level 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.
Read:Steve Eisman of 'The Big Short' fame says the stock market is entering a 'golden age' for banks (http://www.marketwatch.com/story/steve-eisman-of-the-big-short-fame-says-the-stock-market-is-entering-a-golden-age-for-banks-2016-12-19)
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, a low layoff rate and more 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 2.4%, but Allied shares jumped 13%.
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 isthe 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 1.3% 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 rallied as much as 3.5% but closed flat at $43.40.
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) reversed earlier losses and ended higher Monday, amid news of the Russian ambassador's assassination. West Texas Intermediate crude oil for February delivery , the most active contract, closed up 11 cents, or 0.2%, at $53.06 a barrel.
Gold futures for February rose $5.30, or 0.5%, to close at $1,142.70 an ounce.
The dollar (http://www.marketwatch.com/story/dollar-slips-as-investors-cash-in-on-recent-gains-2016-12-19) index was higher late in New York trade, up 0.2% at 103.18, while 10-year Treasury yields pulled back (http://www.marketwatch.com/story/treasury-yields-inch-lower-as-investors-await-yellen-speech-2016-12-19), down 5.7 basis points to 2.54%, its largest one-day drop since August.
--Additional reporting by Ryan Vlastelica
(END) Dow Jones Newswires
December 19, 2016 16:35 ET (21:35 GMT)
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