Stocks rebounded Wednesday from the previous day’s sell-off, as the market continued its back-and-forth pattern. Industrial, transportation, technology and small-company issues helped lead Wall Street higher.
Computer networker Cisco Systems, which tumbled in 2004 and 2005 while the broader market rallied, extended its recent advance. It is up 23% this year.
The Dow Jones industrial average, which lost 104 points Tuesday amid some downbeat economic data, rose 60.12 points, or 0.6%, to 11,053.53 after a new report showed a pickup in manufacturing activity in February.
Also, the government said consumer spending surged in January, confirming strong reports from major retailers in recent weeks.
“This supports the view that first-quarter economic activity is much better than what we saw in the fourth quarter of last year,” said Gary Thayer, chief economist at A.G. Edwards & Sons.
But other data on the economy have been mixed in recent weeks. That has made it difficult for Wall Street to sustain rallies beyond a day or two before selling kicks in.
On Wednesday, however, the bulls were out in force. The Standard & Poor’s 500 index rose 10.58 points, or 0.8%, to 1,291.24.
The tech-dominated Nasdaq composite index surged 33.25 points, or 1.5%, to 2,314.64, its biggest one-day gain since Jan. 3. That lifted the index to its highest level since Jan. 13.
Key indexes of smaller stocks resumed their march to all-time highs. The Russell 2,000 index jumped 11.71 points, or 1.6%, to 742.35, surpassing the previous peak reached Monday.
Winners topped losers by more than 2 to 1 on the New York Stock Exchange and on Nasdaq.
Investors were heartened by the Institute for Supply Management’s report that manufacturing expanded at a faster-than-expected rate last month. That helped boost industrial stocks including Illinois Tool Works, which rose $2.46 to $88.30, and U.S. Steel, which was up $2.22 to $56.72.
Many retail issues gained after the Commerce Department said personal spending shot up by 0.9% in January, the strongest gain in six months. J.C. Penney surged $1.54 to $60.18 and Nordstrom added $1.42 to $39.42.
Economic data suggest that “investors are going to be surprised by the level of corporate earnings strength that we see come out in the first quarter,” said Sandy Lincoln, a fund manager at Wayne Hummer Asset Management in Chicago.
Cisco helped drive the tech sector higher, rising 82 cents, or 4%, to $21.06, its highest close since August 2004. The stock has received a boost as investors bet that phone companies will spend more on equipment to upgrade high-speed networks, as consumers do more over the Internet.
Also in the tech sector, software firm Autodesk rocketed $4.03 to $41.68. It reported higher fiscal fourth-quarter earnings.
Optimism about the economy put upward pressure on Treasury bond yields. The 10-year T-note yield ended at 4.58%, up from 4.55% on Tuesday.
In the municipal bond market, California sold $800 million in general obligation bonds. The securities were purchased by brokerage Morgan Stanley for resale to investors. A spokeswoman for state Treasurer Phil Angelides described demand for the bonds as “high” and said the state was “very pleased” with the sale results.
Oil prices rose for a second day but failed to damp Wall Street’s mood. Near-term crude futures in New York were up 56 cents to $61.97 a barrel.
Among the day’s market highlights:
* Upbeat economic data helped to lift the Dow transportation index to a record high. It gained 77.75 points, or 1.8%, to 4,51414. Trucking firm Ryder System rose $1.05 to $45.39 and FedEx surged $3.19 to $110.43.
* Semiconductor stocks were strong, led by Texas Instruments, which rallied $2.33 to $32.18 after an analyst at research firm Sanford Bernstein said he expected that the company next week would boost its near-term business forecast.
Among other chip makers, Broadcom soared $3.11 to $48.21 and Advanced Micro Devices rallied $1.40 to $40.07. The SOX index of major chip stocks rose 4.3%, its biggest gain in almost 13 months.
* Google edged up $2.18 to $364.80 after diving $27.76 on Tuesday, when its chief financial officer said the company’s growth rate was slowing.
Internet titans Amazon.com and EBay ended lower. Amazon eased 32 cents to $37.12; EBay fell 16 cents to $39.90.
* Class B shares of Brown-Forman, maker of Jack Daniel’s, Southern Comfort and Finlandia liquors, zoomed $5.64 to a record $76 after the company reported quarterly results that beat expectations.
* Youth-oriented retailer American Eagle Outfitters gained $3.44 to $28.91 after its fiscal first quarter earnings beat analysts’ estimates.
* On the downside, General Motors continued its recent slide, losing 41 cents to $19.90 on news of weaker February sales. Also, credit rating firm Fitch cut GM’s bond rating deeper into junk territory.