Stocks soar on strong manufacturing data

US factory output expanded in September, bucking the contraction pattern seen in China, Japan and the eurozone. 3M will buy Ceradyne for $860 million.

By Melly Alazraki Oct 1, 2012 9:18AM
stock marketLast updated 12:22 p.m. ET

Stocks surged Monday after a surprising manufacturing report showed that activity climbed in September. Monday's rally comes after a turbulent previous week that ended a positive quarter.

The Dow Jones Industrial Average ($INDU) was up 147 points at 13,584. The S&P 500 ($INX) was up 12 points at 1,452. The Nasdaq Composite ($COMPX) was up 9 points at 3,126.

U.S. Institute for Supply Management's September manufacturing index climbed from 49.6 in August to 51.5 in September, rising above 50 -- signalling expansion rather than contraction. Economists expected a reading of 49.7, according to Briefing.com. It's the first time since May that U.S. manufacturing expands.

Another manufacturing index, the final Markit U.S. Manufacturing Purchasing Managers Index, fell from 51.5 in August to 51.1 in September -- the lowest in three years -- as foreign demand for U.S. goods fell sharply. A level above 50 indicates expansion.


Construction spending in August fell 0.6% after falling 0.9% in July.


Much of the attention last week focused on Spain, as many observers expect the country to ask for international aid soon. The country last week detailed its 2013 budget plan and reported the results of its banks' stress test, both of which didn't cause markets too much alarm. Spain remains in focus after Moody's Investors Service said the upcoming recapitalization of Spanish banks is credit positive but ultimately may be "insufficient."

Greece's government, too, will unveil its budget later on Monday. It will likely contain tough austerity measures as the country is poised to enter its sixth year of recession.

Europe still struggling
In the eurozone, the number of jobless people climbed to a record high rate of 18.196 in August as the area's economy continued to struggle. The jobless rate in August remained unchanged at 11.4% of the workforce. With the economy struggling, the rate is likely to increase further.

Indeed, the final reading of the purchasing managers index, or PMI, for the eurozone manufacturing ticked higher from 45.1 to 46.1 but remained below 50 -- a level that's signalling contraction in activity -- for the 14th consecutive month.

Still, European stocks moved higher to rebound from last week's losses, which were driven mostly by Spain's woes, and despite weak data out of China.
Chinese manufacturing activity also ticked higher to 49.8 in September from 49.2 in August but remained below 50 -- signalling contraction --  for a second straight month. Japan's Tankan index of large manufacturers' confidence declined to minus 3 for the past quarter. Japana's Nikkei ended lower, but several other markets were closed for a holiday.

Labor market in focus
While focus last week was on Spain, and Monday investors are paying attention to factory data, it's the labor markets that all eyes will turn to this week. Figures from ADP about private-sector jobs and weekly initial jobless claims will set the stage for Friday's monthly nonfarm payroll report from the Labor Department.

Stocks to watch
3M Co. (MMM) has agreed to acquire Ceradyne (CRDN) for $35 a share, which is a 43% premium over the its Friday close. The transaction has an aggregate value of about $860 million, or $670 million net of cash, cash equivalents, short-term investments and debt acquired, 3M said. Excluding one-time costs, the transaction will add about a penny a share to 3M's earnings in the first 12 months after the deal closes, the company said.

Nokia (NOK) and Oracle (ORCL) are expected to announce a deal that will give Oracle's customers access to Nokia's mapping service.

Apple (AAPL) shares advanced, shaking some of last week's losses on the heels of initial iPhone 5 sales that disappointed some analysts. On Friday, CEO Tim Cook apologized for the flawed mapping software.

The U.S. Defense Department on Friday awarded United Launch Alliance, which is a 50-50 joint venture of Lockheed Martin (LMT) and Boeing (BA), a $1.17 billion contract to provide satellite launches using its Delta IV and Atlas V rockets.

Monster Worldwide (MWW) advanced after DealReporter said the company may receive a takeover bid.

Airline stocks such as United Continental (UAL), Delta (DAL) and US Airways (LCC)  may be active, as European airlines gained after the International Air Transport Association increased its 2012 profit forecast for the industry.

Honeywell International (HON) said Monday it'll pay $525 million in cash to buy a 70% stake in Thomas Russell Co., a privately held maker of technology and equipment for natural gas processing and treating.
298Comments
Oct 1, 2012 11:04AM
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Its about time somebody started noticing that the US manufacturing sector was due.  With a low dollar and real quality control and corporate governance (and laws that are actually enforced) the US can COMPETE with lower-wage economies because our companies have gotten efficient.  Asia has so many low wage countries that are too weak in enforcement and European companies are stuck with unions and pensions that simply cost too much.
Oct 1, 2012 11:03AM
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 A mere 3% rise and the October Surprise is Dow 14,000, a dreaded number for Rupert Murdoch owned Fox News  because it give the appearance of progress on the economy to your average knee jerk 100 IQ. Hey , SOMEBODY got more trickle down cash to spend
 Not only will Fox spin 14,000, a lower unemployment rate will be on their merry go round spin as well this Friday
Oct 1, 2012 11:01AM
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All I ave to say is playing with the numbers again, wow is this a joke or what!
Oct 1, 2012 11:00AM
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If hyperbole were a currency neo-cons would all be wealthy.
Oct 1, 2012 11:00AM
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Daughter and son have found jobs that others retired out from.  Daughter is buying her second property, while son pays off his student loans and builds up work history to qualify for a loan next year.

Boomers continue to retire out of the work force at about 300K per month and will draw on their retirement accounts for income. Every month this happens, the economy will continue to expand as this stimulation continues and gets stronger with each consecutive month.  The recovery is here, now and growing.

Oct 1, 2012 10:57AM
Oct 1, 2012 10:57AM
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How's about it's the first day of the month and the funds have a ton of money to put to work.
Oct 1, 2012 10:56AM
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This is a part of a letter Franklin Graham wrote and it tells us how we may get through these times!!!       "

"After watching the political conventions of both parties last month, it’s clear that America is quickly hurtling down a road toward God’s judgment. Christians need to be careful how they vote this fall. Now is the time to stand up for clear biblical standards.

Let us also not forget that lasting change comes not from political parties but from the power of the Gospel. Our nation has lost its way, but when people repent of sin and turn in faith to Jesus Christ, hearts are healed, lives are transformed, and nations begin to be changed."

Oct 1, 2012 10:56AM
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OK Wall street.......run it up to 14,000 now.............    HMMM...........?
Oct 1, 2012 10:54AM
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Floating said; Your math is off - you forgot the cost of the Bush wars.... so did he.


You're right. The debt went up about 3.5 trillion over 8 years with Bush.

Obama's current clip is about 17 trillion over the same time span. Sorry, my bad!
Oct 1, 2012 10:54AM
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yep it's game over for the obama regime, and you idiot lefties in the media can lie all you want and twist and make up poll statistics all you want, this same trend was happening during Reagan/carter, and Reagan blew carter away, cataclysmic landslide victory and carter was 8pts ahead plus in every commie lefty loonie poll you could think of at the time, and history is gonna repeat itself again and those ARE THE FACTS as you will find out in Nov, BIG TIME!!
Oct 1, 2012 10:53AM
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"Stocks surged Monday after a surprising manufacturing report showed that activity climbed in September."

 

Another surprise, I guess we don't need QE3 anymore.

Oct 1, 2012 10:50AM
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With about a month to go, this election has already been decided.  People will listen to the debates but basicly to root for their side. Rarely does one change their minds because it takes too much time to rethink their choice. The total number of undecided voters at this point is 1.5-3 %. Unless the race is neck and neck, it's already game over. Just the fact gentlemen, just the facts.
Oct 1, 2012 10:45AM
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I think what everyone is missing on the European crises is that the changes they need are not just a matter of taxes or austerity but cultural.  In countries such as Greece, Italy amoung others it is not only acceptable but thought of as entitled to not work like we do in North America.  They accept shorter work weeks, long breaks and lunches and a philosophy of taking time to smell the roses if you will.  This is the main reason they are failing as this can not compete with the rest of the world.  One only has to look at the efficient German people to see that it is not the Euro Zone that is not competetive but their way of life that is killing them economically.
Oct 1, 2012 10:43AM
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Floating, 

So let's see......... that's 1.4 trillion over 10 years, vs Obama's 8 trillion over 4 years. You must be SO proud!
Oct 1, 2012 10:39AM
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"Under President George W. Bush and his fellow "deficit hawks," the United States went to war in Afghanistan and Iraq and "forgot" to pay for the wars which will end up adding some $3 trillion to our national debt.

Under George W. Bush and his fellow "deficit hawks," the wealthiest people in this country were given huge tax breaks which cost $1 trillion over a 10-year period. There was no offset for those tax breaks. They were simply added to the deficit.

Under George W. Bush and his fellow "deficit hawks," an overly-expensive Medicare prescription drug program written by the insurance and drug companies was signed into law. This program, which explicitly prevented the government from negotiating lower drug prices with the pharmaceutical industry, was not paid for and will end up adding some $400 billion to our national debt over a 10-year period.

Now, having run up huge deficits, our born-again "deficit hawks," on behalf of their billionaire allies, want to cut Social Security to save money."


- Sen. Bernie Sanders Sept. 5, 2012

Oct 1, 2012 10:39AM
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Oooh ooooh! Isn't this exciting! Even though Spain is drowning in debt, the headlines have a positive message at least for today. And I just heard from an investment computer at Golden Slacks which tweeted "Hey, I only hold stocks for a quarter second! What, me worry about Europe?"

Oct 1, 2012 10:38AM
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It's good to be back from the islands but I see that nothing has changed here, execpt; maybe it's me, but is emwolb a little nicer this year ? I guess things do change a little. And I'm disappointed that I didn't make one of Re-togs list last week. Oh well !

 

As far as the 'free money' out there ? Yea, I'll be riding those 'waves' and capitalizing on them as much as possible. and when they fall, I'll be shorting to pull in those profits. (No - I don't need them to pay for the vacation-last weeks stock shorts took care of that nicely.)

 

Thursday should be good for a laugh on this thread after the debates. Romney is going to make BHO look very foolish Wednesday night- but I know that won't sway some of you libs- 37 MORE DAY'S TILL WE HAVE A NEW PRESIDENT- THANK THE LORD!!

Oct 1, 2012 10:38AM
Oct 1, 2012 10:37AM
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Romney isn't the best person for the job, but Obama is most definitely the worst.
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