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Stocks advance despite
manufacturing report
NEW YORK >> A burst of late-day buying lifted Wall Street higher yesterday as investors shook off downbeat reports on manufacturing and construction spending and placed bets on an improving economy.
Analysts said investors were remaining largely optimistic despite recent mixed economic data. That sentiment enabled the market's major indexes to recover from sharp losses; the Dow Jones industrials bounced back after falling as much as 114 points early in the day.
"Many money managers aren't taking money off the table because they're afraid of missing another 20 percent rally. The market is really looking at the economy to come back," said Todd Leone, managing director of equity trading at SG Cowen Securities.
The Dow closed up 55.51, or 0.6 percent, at 9,040.95.
The broader market also advanced. The Nasdaq composite index gained 17.33, or 1.1 percent, to 1,640.13. The Standard & Poor's 500 index rose 7.82, or 0.8 percent, to 982.32.
Advancing issues outnumbered decliners about 8 to 5 on the New York Stock Exchange. Consolidated volume was moderate at 1.82 billion shares, compared with 2.21 billion traded Monday.
The Russell 2000 index, which tracks smaller company stocks, rose 0.80, or 0.2 percent, to 449.17. The NYSE composite index gained 21.31 to 5,526.48. The American Stock Exchange composite index rose 1.61 to 970.81.
The Institute for Supply Management said its manufacturing index edged up to 49.8 in June compared to 49.4 in May. Still, the figure was lower than the reading of 51 that economists were expecting; it also suggested that manufacturing remained sluggish, since any figure below 50 indicates contraction in the sector.
The Commerce Department reported construction spending fell 1.7 percent in May from the previous month at a seasonally adjusted annual rate of $869.8 billion. It was the third straight month of declines; the figure also fell short of the 0.3 percent gain analysts were expecting.
While stocks have rallied since March, investors are now looking for stronger proof the economy is rebounding. Until then, trading will likely be uneven as it was in yesterday's trading, analysts said.
"It's going to continue to take pounding the market with better numbers and the underlying economic data not being as mixed for stocks to go higher," said Scott Wren, equity strategist for A.G. Edwards & Sons.
Upcoming second-quarter earnings reports will likely be the key, he said.
Gainers included Starbucks, which rose 78 cents to $25.33, after Smith Barney raised the coffee giant's stock rating to "outperform" from "in-line," citing good valuation.
Boeing gained 33 cents to $34.65 after it received an order from AirTran Airways for more than 100 new jets; however, Deutsche Securities also lowered Boeing's stock rating to "hold" from "sell."
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