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.
318Comments
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.
Oct 1, 2012 10:36AM
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More great news for our great President.The Pres has another term,now we just have to

settle the congressional races.Then settle to tax problem before Jan.1st.Everybodys

plan is for me to pay none and everybody else to pay plenty.Johnny Carson had the plan.

He said don`t tax people on income.Tax people on how much sex they have.That way people

would brag about how much they pay and everybody would pay because they would be

embarrested to say they didn`t have sex.

Oct 1, 2012 10:35AM
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roll back the clock and WHEN did we actually have some decent presidential choices?  perhaps clinton vs dole? 

 

>>>>> We have two very bad choices to vote for this year. Neither is for the country, both are for themselves. <<<<<

Oct 1, 2012 10:34AM
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Bill Mahre said on his show recently, "Now that we have mandated government funding for birth control, I'll be able to have my nose fitted for condoms!"
Oct 1, 2012 10:34AM
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So,did Wall Street only read the headline for this BS rally ??I think they did "cause if you read on you find that another manufacturing index fell to its lowest in 3 years.Foreign demand for US goods fell sharply and construction spending also fell.I guess * REALITY MAN * has been defeated again :(
Oct 1, 2012 10:34AM
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Wall street speculators always come up with some BS to make the stocks jump. Its a jOKE!!!!

Think about it if you were selling something and your bonus depended on if you could sell it ,you would get something as a sales gimmick.

Oct 1, 2012 10:32AM
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Why would the markets shoot up from the opening. Could it be everything changed overnight and we have a clear and concise tax plan so businesses are expanding investment and hiring? Do we now have a strong foreign policy that affords adequate protection for our allies and interests overseas? Is US manufacturing now stepping up employment to accommodate increased demand brought about by a strong recovery in jobs and construction spending? The answer is no!! We are reliving the great depression and the only difference is there are no soup lines on main street wrapped around the corner. The government is shielding so many from the pain of reality, the only question is, for how long?
Oct 1, 2012 10:28AM
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Rationality is no longer relevant.  Financial Chaos has taken over. Time to close our eyes and pray folks. Our only option.
Oct 1, 2012 10:26AM
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After reading some of the comments here:

I think the point everyone is missing is that the government and all the politicians could care less about the country and the voters. All they care about is themselves and getting re-elected, so they can continue to rake in the money. Romney said it with his 47% speech and he meant it. The only honesty I ever heard coming from a politician and I still think he's a looser. I don't like Obama either. We have two very bad choices to vote for this year. Neither is for the country, both are for themselves.

What is it going to take to wake up the parties and the politicians? Should we all write in another candidate so neither of these two get elected? What we need to do is something that will shake up both parties and let them know," We're tired and not going to take it anymore."

Oct 1, 2012 10:26AM
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"this is pyramid scheme " how in the world can they say everything is going smooth ,no body is buying homes , the rates are down but when you use to make $20.00 dollars a hour and now make $9.00 dollars a hour .how can you afford a house that cost $200.000 thats about $900.00 a month with taxes and you have to pay for elect,gas,water, etc,,, you cant do it . when i went to school 2 + 2 = 4 now " DO YOUR HOME WORK" by december the market will be about 6000 and the world market will done. "i guess they will have to start over." or ???
Oct 1, 2012 10:20AM
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the Chinese landlords ????  well i guess he is not getting paid. tell him to stand in line. better yet,, tell him ,to try and collect it,,,   lol,,,,,p.s i have to go for my walk,,, my head is starting to spin,,,,,,,,,,,,,,,,,,lol,,,,,,,,,,,,,
Oct 1, 2012 10:20AM
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hmmm 'polls show tough path for Romney' according to ?????? who exactly?? nbc of course and the rest of the commie 'inthetankforosama' media thugs. everything is sooooo much better now? is that it? where? THERE ARE NO JOB CREATIONS IN THIS NATION, and Romney has a 'tough' path?? let's do a little logical thinking here, libs need not get involved in this since I said LOGICAL, a word that's foreign to liberal pigs, anyway, let's take this lib loonie site for example, scroll down today, or go back a few days, wks even and look at all the thumbs down for all things obama, and thumbs up for Romney/Ryan, now let's look at the storyline that says 'polls show tough path for Romney' unemployment is 19%, 'tough path for Romney?' home values plummet and foreclosures left and right 'tough path for Romney?' the mid east is burning due to the obama regime's backing and supporting the muslim brotherhood, our ambassador was assassinated along with 3 other Americans 'tough path for Romney?' this was an Act of War, and no one in this regime is talking 'bout that aspect 'tough path for Romney?' trillions added to an already stratospheric national debt 'tough path for Romney?' 800 billon dollars went south on failed and bankrupted 'green' energy companies 6 of them, 'tough path for Romney?' see where all this is going people, the lies are saturating the leftists media outlets, cuz their sooooo desperate to dishearten the voting public, to demoralized them into not voting, it's trully pathetic and won't work, have you libs forgotten the 2010 Rep landslide victory over the democraps? the Scott Walker recall victory, the media said that was a lost cause as well, so what to make of all this you ask?? leftist propaganda, that's one lie after another, what's sad here is that the loonie libs in the media actually think America is that stupid, again, see you at the voting booths libs.
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I quess the Wall Street bankers know that Bernanke is going to double down on QE5 and announce today that starting today the Federal Reserve will be buying not $40 billion not $80 billion but $250 billion mortgages a month to make the banks healthy once again.

 

Surprised the Dow is not up 800 points today.

 

And that those short term US T-bills that are all coming due in three months all $5 trillion dollars worth that nobody is rolling over as they figure the US is done for now. Well Bernanke is going buy all of those also.

 

Yep it's going to busy down at the Federal Reserve in the coming months.

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