Business

Stocks tack on gains after manufacturing data

Trader William Long Jr., right, works on the floor of the New York Stock Exchange Monday, Aug. 2, 2010.
Trader William Long Jr., right, works on the floor of the New York Stock Exchange Monday, Aug. 2, 2010. Associated Press

NEW YORK - Stocks added to their already big gains on news that the manufacturing industry was stronger than expected during July.

The Institute for Supply Management said its manufacturing index fell to 55.5 last month from 56.2 in June. But that was higher than the 54.1 reading forecast by economists and above the 50 that indicates manufacturing is growing.

Stock trading has been erratic for months because of signs the recovery was weakening. Monday's news was much more encouraging. European and Asian indexes also are climbing after signs of manufacturing growth throughout Europe and China.

The Dow Jones industrial average is up 167.95, or 1.6 percent, at 10,633.89. The Standard & Poor's 500 index is up 17.87, or 1.6 percent, at 1,119.47, while the Nasdaq composite index is up 38.32, or 1.7 percent, at 2,293.02.

Stock trading has been erratic for months because of signs the recovery was weakening and fears that the economy would fall back into recession. But strong earnings in July helped drive stocks to their best month in a year.

Traders also were particularly encouraged Monday about economic strength overseas. A similar manufacturing report for the 16 countries that use the euro was revised higher for July, showing the continent's economy continues to recover faster than expected.

The stock market's spring plunge was triggered by concerns that rising government debt in Europe would stagnate the region's economy and in turn affect other countries including the U.S.

European markets jumped Monday after big profit reports from banking giants HSBC and BNP Paribas provided more relief that the continent's financial sector is not being hurt by the debt problems.

Asian markets gained after Chinese manufacturing data showed growth at a pace where the government isn't likely to take steps to slow the country's economy. Strong earnings in Japan also helped Monday's global rally.

In early morning trading, the Dow Jones industrial average rose 125.87, or 1.2 percent, to 10,591.81. The Standard & Poor's 500 index rose 13.85, or 1.3 percent, to 1,115.45, while the Nasdaq composite index rose 23.86, or 1.1 percent, to 2,278.56.

Britain's FTSE 100 gained 2.1 percent, Germany's DAX index rose 1.8 percent, and France's CAC-40 rose 2.3 percent. Japan's Nikkei stock average rose 0.4 percent and Hong Kong's Hang Seng jumped 1.8 percent.

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