The stock market is extending its summer rally as August brings more upbeat economic data.
reports on manufacturing and housing sent stocks sharply higher Monday.
At one point during the session, the Standard & Poor's 500 index
moved past the 1,000 mark for the first time since early November.
The Institute for Supply Management said that while
manufacturing activity had slowed during July, it did so at the slowest
pace in nearly a year. The private trade group said its manufacturing
index had risen to a better-than-expected 48.9 from 44.8 in June. A
reading above 50 indicates growth.
"We're past the worst of it on the manufacturing side, and we
could even be getting back to growth by the third quarter of this
year," said Jill Evans, co-portfolio manager at Alpine Dynamic Dividend
Meanwhile, the Commerce Department reported a jump
in residential building during June that lifted overall construction
spending for the second time in three months. Analysts had expected a
0.5 percent drop. The report provided new evidence that the housing
sector may be recovering.
Reports showing similar improvements in the industrial sectors
in China, Britain
boosted markets overseas and helped lift
US stocks in the early going.
At midday, the Dow Jones industrials rose 80.87,
or 0.9%, to 9,252.48. The Standard & Poor's 500 index rose 11.40,
or 1.2%, to 998.88, after earlier rising as high as 1,001. The Nasdaq
composite index rose 19.22, or 1.0%, to 1,997.72.
Positive reports from European banks added to the day's upbeat
news and eased concerns about the impact that the credit crisis and
recession have had on the global banking system.
Barclays PLC said its first-half net profit had increased 10%
on stronger earnings from its investment-banking division. HSBC
Holdings PLC reported a 57% decline in its first-half profit, but
results were better than anticipated. Still, losses from bad loans rose
at both banks as consumers in the US and Britain had trouble repaying
In other signs of investors' growing confidence, safe-haven
assets like Treasuries and the US dollar fell, while oil and other
commodities prices rose.
Stocks surged last month, reigniting a spring rally that had
fizzled in June amid growing doubts that the economy was on solid
footing. The Dow recorded its best July in 20 years, soaring 725
points, or 8.6%. Stocks regained momentum as an increasing number of
economic and corporate earnings reports suggested investors' bets had
The reports have shown that companies aren't losing money at
the rapid pace they were last fall and earlier this year. Though there
are concerns that the aggressive cost-cutting measures businesses have
undertaken to boost profits are not sustainable, several upbeat
outlooks from companies like Intel Corp. and Caterpillar Inc. suggest
business conditions are improving.
"At this point through earnings season, patterns have been
firmly established," said Lawrence Creatura, portfolio manager at
Federated Clover Investment Advisors. "It would take a lot to derail
the emerging optimism."
Still, the market is keeping a close watch on unemployment
levels and consumer spending, as well as rising commodity prices and
interest rates that could outpace the economy's recovery.
Among the earnings news Monday, health insurer Humana Inc.'s
profit rose 34% on higher premiums, and Tyson Foods Inc. said income
had soared on solid chicken sales. Marathon Oil Corp.'s profit fell 47%
from a year ago, when oil prices were twice as high, but the results
still exceeded expectations.
Financial stocks climbed following strong profit reports from
European banks. Barclays shot up more than 7%, while Bank of America
Corp. rose 4.9%.