S&P surpasses 1,000 on signs of healing in manufacturing

The stock market extended its summer rally as August brings more upbeat economic data.
Positive reports on manufacturing, housing and banking sent stocks sharply higher Monday, hurling
the Standard & Poor's 500 index past 1,000 for the first time since early November. All the major
indexes rose more than 1%, including the Dow Jones industrial average, which jumped more than
114 points.
The Dow rose 114.95, or 1.2%, to 9,286.56. The S&P 500 index rose 15.14, or 1.5%, to 1,002.62. The
Nasdaq composite index rose 30.11, or 1.5%, to 2,008.61. The Nasdaq rose back above 2,000 for the
first time since October.
The gains were spread across industry groups. The manufacturing data and rising commodity prices
helped to lift energy and material stocks, while stronger earnings reports from European banks
lifted shares of financial companies.
Ford Motor hit a new high for the year as the company's sales rose for the first time in nearly two
years. The federal government's popular "cash-for-clunkers" program helped the automaker to a
1.6% sales gain in July.
The market had already started off on a positive note following reports showing stronger industrial
activity in China, Britain and Europe.
Stocks surged last month, reigniting a spring rally that had fizzled in June amid growing doubts that
the economy was on solid footing. The Dow recorded its best July in 20 years, soaring 725 points, or
8.6%. Stocks regained momentum as an increasing number of economic and corporate earnings
reports suggested investors' bets had been well-founded.
"At this point through earnings season, patterns have been firmly established," said Lawrence
Creatura, portfolio manager at Federated Clover Investment Advisors. "It would take a lot to derail
the emerging optimism."
In other signs of investors' growing confidence, safe-haven assets like Treasurys and the U.S. dollar
fell, while oil and other commodities prices surged.
The market was pleased by a report showing that manufacturing activity slowed during July at the
slowest pace in nearly a year.
The Institute for Supply Management said its manufacturing index rose to a better-than-expected
48.9 from 44.8 in June. A reading above 50 indicates growth.
"We're past the worst of it on the manufacturing side, and we could even be getting back to growth
by the third quarter of this year," said Jill Evans, co-portfolio manager at Alpine Dynamic Dividend
Fund.
Meanwhile, the Commerce Department reported a jump in residential building during June that
lifted overall construction spending for the second time in three months. Analysts had expected a
0.5% drop. The report provided new evidence that the housing sector may be recovering.

Positive reports from European banks eased concerns about the impact that the credit crisis and
recession have had on the global banking system. Barclays said its first-half net profit increased 10%
on stronger earnings from its investment banking division. HSBC reported a 57% decline in its firsthalf profit, but results were better than anticipated.
Among companies reporting earnings Monday, health insurer Humana'sHUM profit rose 34% on
higher premiums, and Tyson FoodsTSN said income soared on strong sales of chicken. Marathon
Oil'sMRO profit fell 47% from a year ago, when oil prices were twice as high, but the results still
exceeded expectations.
Overall, the recent earnings reports have shown that companies aren't losing money at the rapid
pace they were last fall and earlier this year. We are curious to determine exactly what the
implications involving this will possibly be inside coming months and also years. Though there are
concerns that the aggressive cost-cutting measures businesses have undertaken to boost profits are
not sustainable, several upbeat outlooks from companies like IntelINTC and CaterpillarCAT suggest
business conditions are improving.
Still, the market is keeping a close watch on unemployment levels and consumer spending, as well
as rising commodity prices and interest rates that could outpace the economy's recovery.
In other trading, the dollar and bond prices both fell. The yield on the benchmark 10-year Treasury
note, which moves opposite its price, surged to 3.65% from 3.48% late Friday.
Oil, gold and other commodities rose. Commodities traders were heartened by news that
manufacturing in China and Europe is expanding, a sign of support for industrial materials like
copper. Copper prices, which have nearly doubled this year thanks in large part to unrelenting
demand from China, hit a 10-month high.
Light, sweet crude soared $2.13 to $71.58 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 9.07, or 1.6%, to 565.78.
Nearly five stocks rose for every one that fell on the New York Stock Exchange where volume came
to 1.2 billion shares.
Overseas, Hong Kong's Hang Seng index rose 1.1%, while Japan's Nikkei stock average slipped
0.04%. In afternoon trading, Britain's FTSE 100 jumped 1.6%, Germany's DAX index rose 1.8%, and
France's CAC-40 rose 1.5%.
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