The stock market is extending its summer rally as August brings more upbeat economic data.
Better-than-expectedreports on manufacturing and housing sent stocks sharply higher Monday.At one point during the session, the Standard & Poor's 500 indexmoved past the 1,000 mark for the first time since early November.
The Institute for Supply Management said that whilemanufacturing activity had slowed during July, it did so at the slowestpace in nearly a year. The private trade group said its manufacturingindex had risen to a better-than-expected 48.9 from 44.8 in June. Areading above 50 indicates growth.
"We're past the worst of it on the manufacturing side, and wecould even be getting back to growth by the third quarter of thisyear," said Jill Evans, co-portfolio manager at Alpine Dynamic DividendFund.
Meanwhile, the Commerce Department reported a jumpin residential building during June that lifted overall constructionspending for the second time in three months. Analysts had expected a0.5 percent drop. The report provided new evidence that the housingsector may be recovering.
Reports showing similar improvements in the industrial sectorsin China, Britain and Europe boosted markets overseas and helped liftUS 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 Nasdaqcomposite index rose 19.22, or 1.0%, to 1,997.72.
Positive reports from European banks added to the day's upbeatnews and eased concerns about the impact that the credit crisis andrecession 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. HSBCHoldings PLC reported a 57% decline in its first-half profit, butresults were better than anticipated. Still, losses from bad loans roseat both banks as consumers in the US and Britain had trouble repayingdebt.
In other signs of investors' growing confidence, safe-havenassets like Treasuries and the US dollar fell, while oil and othercommodities prices rose.
Stocks surged last month, reigniting a spring rally that hadfizzled in June amid growing doubts that the economy was on solidfooting. The Dow recorded its best July in 20 years, soaring 725points, or 8.6%. Stocks regained momentum as an increasing number ofeconomic and corporate earnings reports suggested investors' bets hadbeen well-founded.
The reports have shown that companies aren't losing money atthe rapid pace they were last fall and earlier this year. Though thereare concerns that the aggressive cost-cutting measures businesses haveundertaken to boost profits are not sustainable, several upbeatoutlooks from companies like Intel Corp. and Caterpillar Inc. suggestbusiness conditions are improving.
"At this point through earnings season, patterns have beenfirmly established," said Lawrence Creatura, portfolio manager atFederated Clover Investment Advisors. "It would take a lot to derailthe emerging optimism."
Still, the market is keeping a close watch on unemploymentlevels and consumer spending, as well as rising commodity prices andinterest rates that could outpace the economy's recovery.
Among the earnings news Monday, health insurer Humana Inc.'sprofit rose 34% on higher premiums, and Tyson Foods Inc. said incomehad 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 resultsstill exceeded expectations.
Financial stocks climbed following strong profit reports fromEuropean banks. Barclays shot up more than 7%, while Bank of AmericaCorp. rose 4.9%.