Stocks Up on Growth Signs
Stocks surged Friday as economic data showed strength in manufacturing and as bargain hunters flocked to the market on the first trading day of the fourth quarter.
A key index of smaller stocks ended at a record high.
With the Institute for Supply Management’s manufacturing-sector index posting the 16th straight month of growth in September, investors’ faith in the economic recovery was renewed, analysts said.
The government’s report that construction spending jumped in August also improved the mood on Wall Street.
Those reports trumped news that crude oil closed above $50 a barrel in New York for the first time, amid uncertainty over Nigeria’s political situation. Oil settled at $50.12, up 48 cents.
“We’ve gotten through September, traditionally the worst month for stocks, in pretty good shape,” said Joseph Keating, chief investment officer at AmSouth Asset Management. “If oil prices can move down, I think we’ll be set up nicely for a rally in November, December and early January.”
The Dow Jones industrial average rose 112.38 points, or 1.1%, to 10,192.65. The Standard & Poor’s 500 index was up 16.92 points, or 1.5%, at 1,131.50, posting its best finish since June 30.
The tech-focused Nasdaq composite index gained 45.36 points, or 2.4%, to 1,942.20, its highest close since July 9.
Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange in active trading.
For the week, the Dow gained 1.5%, the Nasdaq was up 3.3% and the S&P; 500 rose 1.9%.
Friday’s report of continued growth in the manufacturing sector triggered gains in industrial stocks -- many of which had been big winners in the third quarter. Illinois Tool Works rose $1.53 to $94.70, steel maker Nucor jumped $1.65 to $93.02 and Emerson Electric rallied $2.01 to $63.90.
Stocks of smaller companies also advanced sharply. The S&P; 600 index of smaller shares jumped 5.93 points, or 2%, to 297.53, eclipsing the previous peak reached on June 30.
But the good economic news pushed Treasury bond yields higher for the fourth straight day. The yield on the benchmark 10-year T-note rose to 4.19%, up from 4.12% on Thursday and 4.03% a week earlier.
The rise in bond yields reflects growing certainty that the Federal Reserve will continue to raise short-term interest rates, economists say.
Among the day’s highlights:
* Bargain hunting in the technology sector lifted Cisco Systems 83 cents to $18.93, Check Point Software $1.44 to $18.41 and Agilent $1.42 to $22.99.
Also, semiconductor shares saw renewed interest after J.P. Morgan upgraded two semiconductor equipment makers, Novellus Systems and Teradyne. Novellus climbed $1.36 to $28; Teradyne rose 96 cents to $14.36.
Among chip stocks, Broadcom was up $1.67 to $28.96 and Intel climbed 79 cents to $20.85.
* Merck, which lost 27% of its value Thursday after pulling its Vioxx arthritis drug from the market, steadied on Friday, adding 31 cents to $33.31. Also in the drug sector, Eli Lilly rose $1.35 to $61.40 and Pfizer gained 37 cents to $30.97.
* Among new stock issues, PeopleSupport, a Los Angeles company that outsources business services to the Philippines, got off to a rocky start in its first day of trading, falling 50 cents to $6.50.
