September Stock Surprise
U.S. stocks took off in late trading Tuesday, boosted by a slew of upbeat comments on the technology sector from Wall Street analysts and by another batch of strong economic
All of the Dow's 30 components traded in the plus column.
Art Hogan, chief market analyst at Jefferies & Co., said investors took heart in the ISM manufacturing index's rise, even though they know that Friday's employment report will continue to show a lack of job creation.
The gains came as equities face the toughest month of the year. The renowned Stock Trader's Almanac notes that both the Dow industrials and the S&P 500 posted their biggest percentage losses in September over the past 52 years.
That said, the new month tends to begin on a strong note, with the day after Labor Day tallying gains seven out of the past eight years. And the market's outstanding performance to date may give stocks a bit of a cushion to tackle the September blues: The Dow, in fact, is up about 13 percent year-to-date, the Nasdaq around 35 percent and the S&P about 15 percent.
The Dow Jones Industrial Average gained 107 points, or 1.1 percent, to 9,523, bolstered by Eastman Kodak, IBM, General Motors and Honeywell. United Technologies reached a new 52-week high earlier in the session before heading lower.
The Nasdaq picked up 31 points, or 1.7 percent, to finish at 1,841. The Standard & Poor's 500 Index gained 14 points, or 1.4 percent, to finish at 1,022.
"We spent August pricing in great expectations. And history is not on the bulls' side this month," remarked Bryan Piskorowski, a market analyst at Wachovia Securities.
Piskorowski said the market is likely to be "barbelled" by its recent gains and by Friday's employment report. With stocks "overextended" in the near term, the strategist said he would not be surprised to see sideways-type action throughout the month.
"There's a lot of tired blood," Piskorowksi said, pointing to lackluster action in the chip sector despite good news for the group on Tuesday.
Networking and software were the technology sector's best performers, while airline and brokerage stocks took the lead in the broader market. Chip and oil service topped the list of losing sectors.
The day's economic news confirmed recent indicators showing improvements in the factory sector.
The Institute of Supply Management's manufacturing index rose to 54.7 percent in August from July's 51.8 percent, more than the 53.5 percent reading that had been expected by economists. The upbeat reading on the national index followed last week's surge to a 15-month high in the regional Chicago PMI index.
The closely watched ISM index remained above the key 50 percent mark, which separates a contracting manufacturing sector from an expanding one, for a second straight month.
In other news, outplacement firm Challenger, Gray & Christmas revealed that the pace of job cuts slowed in August, with planned layoffs down 6 percent from July's levels. Challenger also said that August was the fourth straight month with fewer than 100,000 announced job cuts, a trend not seen since 2000.