Signs of Healing in Housing, Manufacturing Lift Stocks
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Monday, August 3, 2009; 4:36 PM
Stocks rose Monday as fresh economic data showed improvement in the housing and manufacturing sectors.
The Dow Jones industrial average gained 114.95 points , or 1.25 percent, to close at 9286.56, while the Standard & Poor's 500-stock index climbed 15.15 points, or 1.53 percent, to close at 1002.63. The tech-heavy Nasdaq rose 30.11 points, or 1.52 percent, or to 2008.61.
All of the major indexes are trading at their highest levels so far this year. The S&P crossed 1,000 for the first time since November.
Investors were encouraged by stronger-than-expected economic data, including a Commerce Department report showing that construction spending climbed by 0.3 percent in June compared with the prior month. Analysts had expected spending to decline slightly.
Residential construction spending, for example, rose 0.7 percent, the latest indicator that the housing sector could be on the mend. New home sales spiked last month, and home prices have begun to stabilize in some parts of the country.
Also, the Institute for Supply Management, a private trade group, said its manufacturing index rose to 48.9 last month from 44.8 in June. That was a bigger increase than analysts were expecting. The sector is still shrinking, but at a slower rate, according to the report.
"It would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue," Norbert J. Ore, chair of committee that conducts the survey, said in a statement.
The report indicates that "that manufacturing industries are in the process of breaking out of a very long production recession," Brian Bethune, chief U.S. financial economist for IHS Global Insight, said in a research note.
Crude oil prices jumped more than 3 percent to above $71.58 a barrel on the New York Mercantile Exchange. That helped lift energy stocks, including ConocoPhillips, which was up 2.9 percent.
Ford shares rose more than 4 percent after the auto company posted its first monthly sales increase in two years.
European markets were also up. London's FTSE and the Dax in Germany were up 1.6 percent and 1.8 percent, respectively. Japan's Nikkei was flat.
