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 9:44AM
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Regardless of what the 'statistics' from the Labor department show...  Job growth sucks.  Of course Obama wants the unemployment rate  to dip to 7.9% so it will.  This will occur no matter how many people looking for work need to be uncounted.

Face facts, LESS people are working today than when Obama took office.  This is occurring while 130,000 jobs are needed just to keep up with people entering the workforce.  Of course the 150,000 job left open by people retiring, are just disappearing.

The numbers are clearly being manipulated.  Unemployment is around 10.8% if you account for the people that supposedly have stopped looking for work are counted in...

Obama is clueless.  His policies continue to destroy jobs.   He picks on Romney in his new commercials about doing nothing about China, ummm, excuse me Mr. President, YOU are the one in OFFICE that has done absolutely NOTHING the past 3.5 years, and you CONTINUE to do nothing...
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.

Oct 1, 2012 10:03AM
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If Obama successfully pulls off getting the Market, Europe, Israel, and the rest of the world to essentially tread water and wait until after the election before "something happens," it will BY FAR be his greatest accomplishment of his first term.

But then again, SMOKE & MIRRORS are his strong suit, so at least games like this are something he's well practiced at.....

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 9:40AM
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The fall will be in the fall.

More protests in Spain and France. The Eurozone is going to break up.

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 9:51AM
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"Stocks rise in preparation for presidential debate. Soros gets wood!
 Bill Mahre fears his nose may ejaculate at any moment."
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Oh my gosh -- HOLD THE PRESSES -----

 

Obama has found 20,000,000 new jobs that the labor department had over looked. Adding those jobs for the past 6 months Obama now has the highest job creation rate in history. Even better than the build up in W.W. II

 

The economy is saved (as is Obama's job) and what we had thought would be another huge deficit spending year is going to turn out to be a huge surplus

 

And the Arab nations have decided to allow the USA to rule them directly as colonies which means free oil for us gas is going down to 10 cents a gallon folks the cost of refining.

 

Michelle -- Obama dear wake up, Obama wake up it's time to face the Chinese landlords and explain how we are not going to be able to meet the interest payment on the debt this month.

 

Obama -- What??? I was having the lovest dream , people were back at work the economy was making money hand over fist and Bernanke had retired the printing presses. Is the situation still in a horrible mess???

 

Michelle -- Yes dear and please get up you know how mad our Chinese rulers get when we are late to their meetings.

 

 

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 10:37AM
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Romney isn't the best person for the job, but Obama is most definitely the worst.
Oct 1, 2012 10:45AM
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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 11:16AM
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We have a spending problem, not a taxing problem.  We've got about 320 million citizens.  If the budget of the federal gov is $3.2 trillion (it's actually higher), this comes out to $10,000 in spending for every man, woman and child.  Did you receive $10k worth of services from the federal gov last year?  Did your family of 4 receive $40k in services? Did you pay $40k in federal taxes last year to cover your share?
Oct 1, 2012 10:05AM
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FRAUD STREET up on manufacturing data ?  Who believes this BULL ?   Warehouses are full of stored and unsold goods! And here come the Holidays= Consumer Confidence in the TOILET !
Oct 1, 2012 10:12AM
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Tools, tools and more tools!  Media, brokers, and the Fed are trying desparately to bleed every ounce out of the retirement funds prior to the economic collapse that is now inevitable.  Your dishonesty will be rewarded........maybe not in the way you expect.
Oct 1, 2012 11:16AM
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The brainwashing continues. The administration can say and do whatever they want and the media will justify their actions. For the most part the media in the United States is controlled by this administration. Sure hope history doesn't repeat itself.

 

I have a question, how is the next President going to bring this country back together to get anything done in Washington? This administration has divided the country just to get re-elected.  So are they for the country or their party?

Oct 1, 2012 9:47AM
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Apparently the Kool Aid is flowing free and furiously on Wall Street today. Eying manufacturing? Of what? Stocked supplies are the greatest in history and makers of things are literally DEAD. Where is the 100% focus on JOB RECOVERY? Your vocation is ANALYSIS for the purpose of investment. Tell us, oh great economystics and manipulators of the globe's existence... why every single other person on EARTH can see what needs to get done and you can't.

FIX THE ECONOMY GRUBBERS or relocate off Earth. Tempers and frustrations are mounting and all you can do is make more. Where do YOU go once YOU have screwed the whole world?

Close the banks. End the Federal Reserve. Get RID of Wall Street. If we aren't 100% invested in job recovery RIGHT NOW, we won't be here by the New Year.

Oct 1, 2012 11:43AM
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36 days until the election.  We will see some window dressing #'s to make things look rosy- that will be revised downward once the election is over.  We had a number revised downward last week and it was stated as " a downward revised FINAL ESTIMATE" - what a joke.

 

These are the 2 pressing issues that bother me about this administration -

 

1. Fast & Furious - neither Eric Holder nor President Obama have acknowledged they know anything about this.  I am not politically correct so - I will go ahead and call both of these people LIARS - We lost a border patrol agent and his family has no closure!

 

2. The attacks on 9/11/2012 in Benghazi, Libya where the Ambassador to Libya Chris Stevens, a state department computer expert and 2 former U. S. Navy SEAL commandos were killed was also swept under the carpet..

 

I do not want any Commander In Chief regardless of party turning his/her nose on such tragic news.  These 2 events should be enough to make everyone think - does this President have the best interest of the American citizen at heart.

 

Does any American citizen NOT believe that the familes of these dead Americans deserve a full explanation and APOLOGIES ON NATIONAL TV to say the Adminstration screwed up and lied?

 

Eric Holder should be prosecuted and put in jail!  President Obama should be impeached!

 

 

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 9:51AM
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"Face facts, LESS people are working today than when Obama took office.  This is occurring while 130,000 jobs are needed just to keep up with people entering the workforce.  Of course the 150,000 job left open by people retiring, are just disappearing."

No more crap, MG... BUSINESSES HIRE, Presidents do not. Take your narrow-minded position and relocate. We need hired-in executives of Founder-less businesses pulled out of those leased office suites and replaced with HONEST business people. Most countries other than ours have already figured that out.
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