New York: US stocks staged a broad rally that drove the S&P 500 to its best day in two months on Monday after manufacturing, consumer spending and construction data instilled confidence that the economic recovery is gaining traction.
Transport stocks had their best day in six months following an industry report that the US manufacturing sector grew in April at its fastest pace in almost six years and as UAL Corp agreed to buy Continental Airlines Inc to create the world’s largest airline.
“All these numbers are good and continue to point to the economy doing very, very well,” said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
Details of a European financial rescue package for debt-stricken Greece also provided a measure of relief on an issue that has cast a cloud over the market in recent months.
The Dow Jones industrial average rose 143.22 points, or 1.30%, to 11,151.83. The Standard & Poor’s 500 Index gained 15.57 points, or 1.31%, to 1,202.26. The Nasdaq Composite Index added 37.55 points, or 1.53%, to 2,498.74.
The government reported an unexpected rise in construction spending in March, and consumer spending edged up for a sixth-straight month.
The report on manufacturing from the Institute for Supply Management helped boost shares of industrial companies, including Dow components Caterpillar Inc and Boeing Co, which closed up 2.7%.
Consumer discretionary shares were among the top-performing sectors on the broader S&P 500, with upscale retailer Nordstrom Inc up 5.6% at $43.63.
Shares of UAL, the parent of United Airlines, rose 2.4% to $22.11, and Continental Airlines rose 2.3% to $22.86 after UAL agreed to buy Continental Airlines Inc in a $3.2 billion stock deal. Airline shares led the advance in the Dow Jones Transport index, rising 2.9% in the largest daily%age gain in six months.
Home builder and related shares rallied on the construction spending data. The PHLX housing index jumped 2.4%, with Hovnanian Enterprises Inc up 12.4% to $7.99 and timber company Weyerhaeuser Co up 2.5% at $50.76.
The Nasdaq registered the biggest gains of the three major indexes, helped by a 2% gain in Apple Inc after the company said it has sold 1 million iPads since the tablet computer’s early April launch, exceeding expectations. Apple shares closed at $266.35.
Chip maker stocks gained as global semiconductor sales in March rose according to industry data. SanDisk Corp jumped 9.2% to $43.52 and the PHLX semiconductor index added 2.6%.
US-listed shares of BP Plc were the second-most heavily traded on the New York Stock Exchange, falling 3.8% to $50.19. The energy giant promised to pay for the cleanup and compensation claims for a catastrophic oil spill threatening the US Gulf shore and said it was working to stem the undersea leak.
On the flip side, shares of companies that make products used to counteract the oil spill in the Gulf of Mexico jumped. Nalco Holding Co gained 5.9% to $26.19 while Superior Energy Services Inc added 1.2% to $27.38 and Clean Harbors Inc gained 5.6% to $66.98.
Billionaire investor Warren Buffett on Sunday stood by his feisty defense of a controversial mortgage transaction marketed by Goldman Sachs Group Inc that is at the center of government fraud charges against the bank. Buffet, whose Berkshire Hathaway company owns $5 billion of Goldman preferred shares that pay out a hefty 10% dividend, said the investment bank’s behavior does not warrant public fury.
Goldman Sachs shares rose 3% to $149.50.
About 8.6 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 17 to 5, while on the Nasdaq, about 13 stocks rose for every five that fell.