NEW YORK (CNN/Money) -
Stocks scored their biggest gains in more than three months Wednesday, starting a traditionally fickle month and the fourth quarter on a strong note, as investors put money back to work after a recent sell-off.
The Dow Jones industrial average (up 194.14 to 9469.20, Charts) jumped 2.1 percent, its largest advance since June 16. All but two Dow components, General Motors and AT&T, recorded gains. The Nasdaq composite (up 45.31 to 1832.25, Charts) added 2.5 percent and the Standard & Poor's 500 (up 22.25 to 1018.22, Charts) posted a 2.2 percent gain.
Stocks fell sharply Tuesday and ended September with losses. But all three indexes managed gains for the third quarter. (For a look at the quarter's winners and losers, click here.)
"We've had a pretty good sell-off for the last week and a half," Evan Olsen, head of equity trading at Stephens Inc., told Reuters. "I kind of characterize it as a relief rally."
Despite a weaker-than-expected reading on manufacturing, signs of continuing growth in the sector, coupled with reports of slowing job losses and a rise in construction spending, helped encourage investors. Some individual corporate news, including a jump in Ford sales in September and a reaffirmed outlook by 3M, also helped the rally.
And while Wednesday's rally was strong, traders say the optimism, at least, could extend into Thursday. (For more on the outlook for the market this fall, click here).
"It might be tough to keep up this pace, but the gains will probably continue," said Tom Schrader, head of listed trading at Legg Mason. "People are definitely putting money into stocks."
Thursday brings some economic data that could garner attention. After the start of trading, the government is due to report on factory orders for August, which economists expect fell 0.5 percent after rising 1.6 percent the prior month.
Before the bell investors will get a reading on weekly jobless claims, forecast to have risen to 395,000 from 381,000 the previous week, according to analysts surveyed by Briefing.com. Any reading below 400,000 signals contraction in the labor market.
The reading comes a day before the Labor Department releases its September jobs report, which economists expect to show a narrowed loss of 25,000 jobs after a decline of 93,000 in August. The weak labor market has worried investors because the economy has lost jobs for seven consecutive months.
Economic data in spotlight
Wall Street's attention Wednesday focused on the Institute for Supply Management's index of manufacturing activity for September.
Following a steep decline in the regional reading for the Midwest on Tuesday, many investors were braced for weakness in the national index as well. But a reading of 53.7, compared with 54.7 in August, was deemed less-than-dire and stocks extended their opening gains after the number was released. Any reading over 50 points to growth in the sector.
"The numbers were nothing too special, it wasn't the most optimistic reading," said James Park, senior trader at Brean Murray & Co. "We're just seeing a lot of resilience today. Some people are coming back in and buying on the new quarter."
News that the pace of job cuts slowed down in September, according to the latest Challenger, Gray & Christmas survey, also helped boost the market. The report gave investors some hope for a better monthly employment report, which is due Friday. The stubborn weakness of the labor market, even as other parts of the economy have picked up, has fueled concerns over whether the economic recovery has legs.
A rise in construction spending in August to its highest level since the start of the year also chimed into the bullish tone of the market, despite coming in lower than Wall Street's average expectation.
Automakers in focus
Shares of Ford Motor (F: up $0.33 to $11.10, Research, Estimates) jumped 3.1 percent after the No. 2 automaker said its sales rose an unexpectedly strong 5.2 percent in September.
Both Ford and DaimlerChrysler (DCX: up $0.82 to $35.88, Research, Estimates) may be set to cut thousands of jobs as they struggle with stiff price wars in the United States. Shares of DaimlerChrysler, whose sales fell 15 percent in September, rose 2.3 percent. Rival General Motors (GM: down $0.37 to $40.56, Research, Estimates), which extended its zero percent financing incentives on 2004 models, fell nearly 1 percent.
Another Dow stock, Exxon Mobil (XOM: up $0.75 to $37.35, Research, Estimates), rose 2.1 percent despite reports that the company may have to pay an additional $100 million related to the 1989 oil spill in Alaska from its tanker Exxon Valdez.
3M (MMM: up $1.83 to $70.90, Research, Estimates), also in the Dow, added 2.7 percent executives reaffirmed 2004 earnings estimates and said the basic materials company was on track to meet long-term growth goals.
Morgan Stanley (MWD: up $1.53 to $51.99, Research, Estimates) jumped 3 percent on reports it has fired dozens of employees, including money managers, in a bid to boost investment performance.
Some pharmaceutical companies helped push the broader market higher.
VaxGen (VXGN: up $0.58 to $12.65, Research, Estimates) jumped 4.8 percent after it won an $80 million contract from the National Institutes of Health to work on the development of an anthrax vaccine.
Eli Lilly (LLY: up $3.61 to $63.01, Research, Estimates) added 6.1 percent after the Food and Drug Administration told the company that its depression drug, Cymbalta, would be approved if the company satisfied certain conditions.
Schering-Plough (SGP: up $0.61 to $15.85, Research, Estimates) bounced 4 percent after saying an investigation into manufacturing practices at its plants in Puerto Rico had been closed and prosecutors won't seek legal action.
Market breadth was positive. On the New York Stock Exchange, where 1.1 billion shares traded, advancing issues beat decliners better than 3-1. On the Nasdaq, the ratio stood at more than 2-1 as 1.4 billion shares changed hands..
At 5 p.m. ET, Treasury prices were mixed, with the 10-year note gaining 2/32 of a point to yield 3.93 percent, down from 3.94 late Tuesday. The dollar sank against the yen and also lost ground against the euro.
NYMEX light sweet crude oil futures rose 19 cents to $29.39 a barrel. COMEX gold lost $1.10 to $385 an ounce.
Stocks in Europe finished mostly higher. Asian stocks ended mixed.
|
