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December to remember? Dow starts month up 168

Adam Shell
USA TODAY

The broad U.S. stock market, coming off its second straight month of gains for the first time since May, was in rally mode — with the Dow ending up 168 points — as it kicked off its first trading day of December, a month that historically has been kind to investors.

Traders work on the floor of the New York Stock Exchange on Nov. 30, 2015. (Photo by Spencer Platt/Getty Images)

The benchmark Standard & Poor's 500 stock index eked out a gain of 0.05% in November, building on its sizable 8.3% rally in October. Wall Street is hoping to stretch the winning streak to three months as investors enter the homestretch of 2016.

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Historically, December has been a profitable month for stocks. In the past 100 years, December has ranked No. 1 in performance, posting an average gain of 1.46%, although gains have downsized to 1.37% in the past 20 years.

Investors are digesting the results of Cyber Monday, which Adobe says is stacking up to be the "largest online sales day in history." Adobe estimates that online sales yesterday totaled roughly $2.98 billion, a 12% increase over 2014 Cyber Monday sales.

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Wall Street is getting news on vehicle sales counts for November, which analysts say could top 18 million at an annualized rate for the third straight month. But VW said it suffered a 25% drop in sales as the emissions scandal crushed the brand's U.S. sales in November, despite heavy discounts and a strong month for the overall auto industry.

Investors also got news that manufacturing activity shrank last month for the first time in three years as a strong dollar and weakness overseas continue to crimp the industry. An index of factory activity fell to 48.6 from 50.1 the previous month., the Institute for Supply Management said Tuesday. A reading above 50 means the sector is expanding; below 50 indicates contraction. Economists expected a rise to 50.5.

The big event this December comes on Dec. 16, when the Federal Reserve breaks from its final meeting of the year and is expected to hike interest rates for the first time in nearly a decade. Wall Street is expecting short-term rates, currently pegged near 0%, to be increased by a quarter of a percentage point. Low rates, of course, have been cited as a key reason why the U.S. stock market has more than doubled in value since the start of the bull market in March 2009. A shift to higher rates changes the investing equation and worries some investors.

A key event leading up to the Fed decision comes this Friday, when the government reports how many jobs were created in the U.S. in November as well as the latest unemployment rate. In October, a bigger-than-expected 271,000 jobs were created, dramatically boosting the odds of a rate increase this month by the U.S. central bank. The minutes of the Fed's last meeting in October released on Nov. 18 indicated that they are ready to move barring any unforeseen deceleration in the economy or job growth.

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Economists expect the November jobs report to show that employers added more than 200,000 jobs in November, a number that would likely cement a Fed hike in two weeks.

Global stocks were mixed Tuesday. Shares were higher across the board in Asia but mixed in Europe.

Japan's Nikkei 225 rose 1.3%. Hong Kong's Hang Seng index rallied 1.8% and mainland China's Shanghai composite gained 0.3%.

In Europe, the broad Stoxx Europe 600 was up 0.2%, while the German DAX was unchanged and the CAC 40 in Paris was down 0.1%.

Adam Shell on Twitter: @adamshell.

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