Stocks look to start 2012 higher

NEW YORK (CNNMoney) -- U.S. stocks were headed for a rally on the first day of 2012, as investors welcome stronger manufacturing reports out of emerging economies.

In early trading, Dow Jones industrial average (INDU), S&P 500 (SPX), and Nasdaq (COMP) futures were all up about 1.5%. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

U.S. markets were closed for the New Year holiday on Monday.

"There's an element of catch-up for the U.S.," said David Jones, chief market strategist at IG Index. "Probably more importantly, we've had some strong manufacturing data out for China and India that was better than expected."

Over the weekend, the Chinese government released its official reading on manufacturing activity, showing the sector expanded slightly in December, after contracting the month before. And on Monday, a report compiled by HSBC and Markit showed India's manufacturing activity picked up significantly during the month.

Investors worldwide are tuning in closely to economic numbers out of China in particular, because its rapid growth has led the global recovery -- but recent figures have shown some signs of weakness.

Stocks in 2012: Choppy but higher

U.S. stocks finished little changed Friday, bringing to an end a year in which the S&P dropped just 0.04 point -- the smallest annual change in history.

The Dow rose 5.5% for the year, while the Nasdaq lost 1.8%.

Trading was slow all last week, with many investment professionals on break for the holidays.

In addition, few major economic and earnings reports were released, leaving investors mulling the same macro problems that moved markets through much of the year. As trading begins in 2012, all eyes remain on Europe and its long-running sovereign debt crisis.

Economy: The December installment of the ISM Manufacturing Index, due after the market open, is expected to rise to 53.4 from 52.7 in November, according to a consensus of economists surveyed by Briefing.com. Any reading above 50 signals expansion in the sector.

The government will release data on construction spending for the month of November . Analysts surveyed by Briefing.com expect construction spending to have risen by 0.5%, after rising 0.8% in October.

Also on Tuesday, the Federal Reserve will release minutes from its Dec. 13 meeting.

Companies: Chesapeake Energy (CHK, Fortune 500) shares rose 3.2% in premarket trading, after the Oklahoma City-based energy company announced it completed a venture with an affiliate of French oil company Total (TTFNF) that gives the French firm a 25% stake in more than 600,000 acres in eastern Ohio, an area rich in shale oil.

Mead Johnson Nutrition (MJN) shares rose 4.2% after two U.S. government agencies said they have completed their investigation of Enfamil and found the baby formula safe to use. The Food and Drug Administration and the Centers for Disease Control and Prevention had stepped in after a newborn baby died of a rare bacterial infection that they suspected could be linked to the powder-based infant formula.

World markets: European stocks were mixed in afternoon trading. Britain's FTSE 100 (UKX) rose 1.1%, the DAX (DAX) in Germany added 0.7% and France's CAC 40 (CAC40) lost 0.8%.

The Hang Seng (HSI) in Hong Kong added 2.4%. Markets in Shanghai (SHCOMP) and Tokyo (N225) were both closed for an extended New Year holiday.

Currencies and commodities: The dollar fell against the euro, the British pound and the Japanese yen.

Oil for February delivery added $2.33 to $101.16 a barrel.

Gold futures for February delivery rose $23.70 to $1,590.60 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.95% from 1.87% late Friday.