While you were sleeping: UPDATED Wall Street rises as defensive stocks catch up

Wall Street moved higher, along with US Treasury notes and oil, as investors remained upbeat about the outlook but also stocked up on more defensive assets that had fallen behind in the post-election rally.

US Federal Reserve chairwoman Janet Yellen noted optimism about the nation's job market for a commencement speech in Baltimore, Maryland.

Last week the Fed lifted its key interest rate for the first time in a year, and signalled three rate hikes next year, one more than previously flagged. That underpinned optimism about the outlook for growth and profits.

"After years of a slow economic recovery, the US is entering the strongest job market in nearly a decade," Mrs Yellen says.

"There are also indications that wage growth is picking up, and weekly earnings for younger workers have made strong gains over the past couple of years.

"Challenges do remain... The economy is growing more slowly than in past recoveries and productivity growth, which is a major influence on wages, has been disappointing."

At the close, the Dow Jones Industrial Average rose 39.65 points, or 0.2%, to 19,883.06. The Nasdaq Composite Index climbed 0.4% to 5457.44 while the Standard & Poor's 500 Index increased 0.2% to 2262.53.

Gains in Microsoft and United Technologies shares, trading 2.1% and 1.8% higher respectively, led the gains in the Dow. Bucking the trend were Merck and UnitedHealth shares, down 1.5% and 1.2% respectively.

Weighing on sentiment was the death of Russia's ambassador to Turkey after he was shot at an art exhibit in Ankara, the Turkish capital, in an assassination reportedly linked to Syria's civil war.

"With the backdrop of where it happened, it is a strong enough and a powerful enough headline to have the market pause and see what the broader implications may be, New Jersey-based Prudential Financial strategist Quincy Krosby told Reuters.

Bond yields, oil price up
US Treasurys also rose, pushing yields on the 10-year note to 2.54%. US crude settled up 0.4% at $US52.12 a barrel after swinging between gains and losses throughout the session.

In Europe, the Stoxx 600 Index finished the day with a 0.1% decline from the previous close. The UK's FTSE 100 Index eked out a 0.1% gain, while Germany's DAX Index rose 0.2%.

"Having come off a decent December so far for European stocks which have seen a number of significant breakouts, the key question as we head into year-end is whether these gains of the past two weeks are likely to be sustained," London-based CMC Markets analyst Michael Hewson told Bloomberg.

France's CAC 40 Index fell 0.2%.

Shares in France's Danone closed 1.4% lower after the world's biggest yoghurt maker downgraded its estimate for its 2016 sales growth, citing market conditions in Spain and the revamp of its Activia yoghurt brand.

"In the fourth quarter, Activia's performance, as well as aggravated market conditions in Spain, have impacted Europe dairy results," Danone says.

As a result, Danone said, it now expects 2016 sales growth to be "slightly below" its initial target of an increase of between 3% and 5%.

Even so, it expects to post recurring operating margin improvement above its previous target for a gain of between 50-60 basis points.

(BusinessDesk)