• The Wall Street Journal
• December 23, 2015 8:46AM
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US stocks gained on Tuesday along with commodity prices.

Stocks drifted higher throughout the day on light stock-trading volume ahead of the Christmas holiday, traders said. The rise added to Monday’s gains, putting the S&P 500 index on track to finish the year down about 1 per cent.

The gains follow several weeks of volatility for stocks, as weakness in commodities and a tumble in high-yield bonds dragged down the broader market.

“Oil and high yield have been all anybody wants to talk about,” said R.J. Grant, associate director of equity trading at KBW Inc., who added that modest gains in the price of oil on Tuesday helped boost stocks.

In day-to-day trading, a key barometer of whether stocks can sustain gains has been the price of oil, traders said. On Tuesday, U.S. oil prices climbed 0.9 per cent to $36.14 a barrel following steep declines in recent weeks. The price of oil remains down more than 32 per cent for the year.

“If we see continued stabilisation there, maybe we will get a lift into the new year for stocks,” Mr. Grant added.

On Tuesday, the Dow Jones Industrial Average rose 165.65 points, or 1 per cent, to 17417.27. The S&P 500 climbed 0.9 per cent and the Nasdaq Composite gained 0.65 per cent.

“We’re seeing a lot of indecision in this market,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co. “There seems to be all this negativity in the outlook going forward, with the consensus that rates will go up, corporate earnings are at risk, and we’re not quite sure if energy is going to turn around. At the same time, where else are you going to go?”

U.S. stocks are still attractive relative to other asset classes and many stock markets around the globe, he said, making it tough to cash out even if investors are pessimistic about 2016.

“That’s why you’re seeing this market sway back and forth,” he said.

The gains in the price of oil on Tuesday also helped steady the high-yield market, with junk bonds generally trading higher. The largest high-yield bond exchange-traded fund by assets, the iShares iBoxx $ High Yield Corporate Bond ETF, rose 1.2 per cent.

Bonds from some energy firms were among the biggest gainers, including debt from Transocean, Whiting Petroleum and Oasis Petroleum.

Concerns about U.S. high-yield debt and the energy sector have kept a lid on gains, traders and investors say.

“Credit spreads are pointing toward a weak stock market,” said Mr. Morgan, though he added as long as U.S. GDP doesn’t turn negative, he doesn’t foresee a catastrophic pullback.

The U.S. economy expanded at a slightly slower pace than initially estimated in the third quarter, data showed Tuesday. Gross domestic product grew at a 2.0 per cent annual rate in the third quarter, the Commerce Department said, less than its previous estimate of 2.1 per cent. Economists surveyed by The Wall Street Journal had expected growth of 1.9 per cent.

Some investors remain sceptical of the stabilisation across markets, and say they expect more weakness in stocks in the new year.

“The stock market is digesting a slowdown,” said James Abate, chief investment officer of Centre Funds and portfolio manager of the Centre American Select Equity Fund.

As a result, Mr. Abate said he is finding fewer companies that he believes will be able to generate returns and improve margins. He said he currently holds 51 stocks in his strategy, the fewest individual companies since early 2000, though he was at a different firm at that time.

In corporate news, shares of Chipotle Mexican Grill fell 5.25 per cent after the Centers for Disease Control and Prevention said Monday it was investigating another outbreak of E. coli last month linked to the restaurant chain.

The Stoxx Europe 600 fell 0.1 per cent. Spain’s IBEX 35 stock market index rose 0.5 per cent, following a 3.6 per cent decline Monday after inconclusive elections over the weekend raised fears among investors that the country would face a prolonged period of uncertainty.

The U.K.’s resource-heavy FTSE 100 index rose 0.8 per cent.

In Asian trade, the Shanghai Composite Index added 0.3 per cent after Chinese leaders approved an economic blueprint for next year that aims to rebalance the world’s second-largest economy and find new sources of growth.