Stocks surge on manufacturing, housing data

Stocks ended higher Monday after another day of big swings that confirmed the return of volatility to Wall Street after months of relative calm.

Stronger reports on manufacturing and housing gave the market an early boost, but a rise in the dollar and worries about the soundness of stocks’ eight-month rally chipped away at the gains. A late surge left the Dow Jones industrial average up 77 points for the day, only about half of the gain it had earlier in the session.

After a nearly unbroken advance since midsummer, stocks have fluctuated much more in the last week or so as investors have worried that the pace of the economic recovery will be hard to maintain.

In trading reminiscent of the huge swings of a year ago, the Dow has gained or lost more than 100 points in six of the last eight days.

“It’s a flip of a coin right now,” said Jeffrey Frankel, president of Stuart Frankel & Co. “You never know what you’re going to get the next day when you come in to work.”

The Standard & Poor’s 500 index is up 54% since March despite losing 2% in October.

“The question is, ‘Is the trend changing?’ ” said Jim Dunigan at PNC Wealth Management.

On Monday the Dow rose 76.71 points, or 0.8%, to 9,789.44, its fourth gain in 10 days. The S&P; 500 climbed 6.69 points, or 0.6%, to 1,042.88, and the Nasdaq composite index rose 4.09 points, or 0.2%, to 2,049.20.

Also helping stocks was a positive surprise from Ford Motor, which reported that it earned nearly $1 billion in the third quarter and turned a profit in North America for the first time since 2005. Ford’s stock jumped 8.3%.

The market gained initially after the Institute for Supply Management said its index of manufacturing activity rose more than expected in October, reaching its highest level since April 2006. And the National Assn. of Realtors said pending home sales increased for the eighth straight month in September, also topping expectations.

Separately, the Commerce Department said construction spending increased 0.8% in September, matching the gain in August. Economists had been expecting a drop.

But the reports weren’t enough for stocks to hold their gains all day as the dollar rose against other major currencies. That briefly hurt commodity prices and exporters.

Financial stocks faltered briefly after a Federal Reserve banking regulator told lawmakers that “significant stress and weaknesses” remained in the financial system and that banks faced more heavy losses on loans.

Shares of Citigroup fell below $4 for the first time since August, giving up 10 cents, or 2.4%, to close at $3.99.

Treasury bond yields advanced along with stocks. The 10-year T-note rose to 3.42% from 3.39% late Friday.

Oil futures climbed $1.13 to $78.13 in New York trading.

The Russell 2,000 index of smaller stocks fell 0.1%.

Overseas, key stock indexes rose 1.2% in Britain, 0.3% in Germany and 0.9% in France. Japanese shares fell 2.3%.