4:30 pm : Better-than-expected economic data helped the S&P 500 ascend to a 1.5% gain, but a bout of selling and technical resistance sent stocks to a 0.7% loss before buyers stepped back in to drive stocks to a positive finish.
News that the ISM Manufacturing Index for October came in at 55.7, construction spending in September spiked 0.8%, and pending home sales for September made a 6.1% monthly increase helped bring about some early, broad-based buying, which sent all 10 major S&P 500 sectors into the green.
Financials were a standout as the sector climbed to a 2.5% gain. Investors in the sector paid little attention to news that regional lender CIT Group will enter bankruptcy after weeks of struggling to secure financing and put together a plan for sustainability.
However, financial stocks soon saw their gains reverse as weakness among insurers spread to the rest of the sector. That took the financial sector to a 1.7% loss before buyers stepped back in and helped it finish with a 0.8% gain.
Midsession weakness among financials undercut the broader S&P 500, which was having trouble extending its gains past its 50-day moving average of 1052. Such technical resistance combined with weakness in one of the stock market`s leading sectors eventually caused the broader market to roll over and surrender all of its gains.
Stocks were able to garner some support as an underlying bid limited the stock market`s move to the downside. That support inevitably helped it settle the session with a gain.
Volatility returns to markets, pulls Dow off highs
Stocks end higher after jumpy trading; economic data don`t quiet worries about pace of gains
* By Sara Lepro and Tim Paradis, AP Business Writers
* On 6:10 pm EST, Monday November 2, 2009
NEW YORK (AP) -- After months on hiatus, volatility is back on Wall Street.
AP - FILE - In this May 11, 2007 file photo, a Wall Street sign is seen at an entrance ...
Stocks ended higher Monday after another day of big swings. Stronger reports on manufacturing and housing gave the market an early boost but a rise in the dollar and worries about the soundness of an eight-month rally chipped away at the gains. A late surge left the Dow Jones industrial average with a gain of 77 points but still down by about half from its best levels of the day.
After nearly unbreakable gains since midsummer, trading has become much rockier in recent weeks as investors worry that the pace of the economic recovery they have been counting on will be hard to maintain.
Jittery traders have pushed the market around in ways more reminiscent of the huge swings of a year ago than the smoother advance stocks have seen since the early spring. The Dow has gained or lost more than 100 points in six out of the last seven days. The last time the Dow had as long a streak of triple-digit moves was in late March, shortly after major stock indexes bounced off 12-year lows.
Good news can still lift the market, but those gains are now less likely to hold than they were earlier in the year. The market jumped last Thursday after the government reported the economy grew at a 3.5 percent pace in the July-September quarter, well ahead of expectations.
But that enthusiasm faded as many noted that much of the growth came from government spending programs which are winding down. Likewise, many companies are reporting stronger-than-expected earnings, but in many cases the gains came from cost-cutting instead of higher sales. On Friday the Dow slumped 250 points as those worries deepened, more than erasing the 200-point gain from the day before.
Analysts say many investors still expect the economy to improve but are worried it won`t happen as quickly as they had hoped. The signs of investor anxiety are clear. The Chicago Board Options Exchange`s Volatility Index, known as Wall Street`s fear gauge, crept up to 31.84 Monday -- a fresh four-month high -- before ending at 29.78.
"It`s a flip of a coin right now," said Jeffrey Frankel, president of Stuart Frankel & Co. "You never know what you`re going to get the next day when you come in to work."
As the market enters the final months of the year, the Standard & Poor`s 500 index is up 54.2 percent from a 12-year low in March even after losing 2 percent in October.
"The question is, is the trend changing?" said Jim Dunigan, managing executive of investments at PNC Wealth Management.
Trading is likely to be volatile this week as investors sift through a flood of economic data, including the government`s monthly employment report on Friday. The Federal Reserve will also weigh in on the economy after a two-day policy meeting on Wednesday.
On Monday, the Dow rose 76.71, or 0.8 percent, to 9,789.44, its fourth gain in 10 days. The broader Standard & Poor`s 500 index rose 6.69, or 0.7 percent, to 1,042.88, and the Nasdaq composite index rose 4.09, or 0.2 percent, to 2,049.20.
The seesaw trade came after the Institute for Supply Management said manufacturing activity grew in October at the fastest pace since April 2006 and much better than expected. Meanwhile, the National Association of Realtors said pending home sales increased for the eighth straight month in September, also topping expectations.
Separately, the Commerce Department said construction spending increased 0.8 percent in September, matching the gain in August. Economists had been expecting a drop.
The reports goosed stocks higher in the morning but weren`t enough to hold the gains through the afternoon as the dollar rose against other major currencies. That briefly hurt commodity prices and exporters.
Financial stocks faltered briefly after Jon D. Greenlee, the Federal Reserve`s associate director for banking supervision and regulation, told lawmakers that "significant stress and weaknesses" remain in the financial system and that banks face more heavy losses on loans.
Citigroup Inc. fell below $4 for the first time since August, giving up 10 cents, or 2.4 percent, to $3.99.
Investors also found optimistic news. Ford Motor Co. surprised investors by reporting that deep cost cuts and the government`s Cash for Clunkers rebates helped it earn nearly $1 billion in the third quarter. The stock jumped 58 cents, or 8.3 percent, to $7.58.
Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where consolidated volume came to 6.3 billion shares, compared with 6.8 billion Friday.
Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.42 percent from 3.39 percent late Friday.
Oil rose $1.13 to settle at $78.13, while gold rose on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies fell 0.37, or 0.1 percent, to 562.40.
Overseas, Britain`s FTSE 100 rose 1.2 percent, Germany`s DAX index added 0.3 percent, and France`s CAC-40 rose 0.9 percent. Japan`s Nikkei stock average dropped 2.3 percent.
Obama: Hiring last to come as economy rebounds
Obama: Hiring lags behind economic growth, so job losses will continue for `weeks and months`
* By Ben Feller, Associated Press Writer
* On 4:41 pm EST, Monday November 2, 2009
WASHINGTON (AP) -- As the prospect of double-digit unemployment looms, President Barack Obama on Monday sought to set expectations for the nation, saying job losses will likely roll on "for weeks and months to come" because hiring always lags behind in an economic rebound.
"We just are not where we need to be yet," Obama said as he met with a panel of economic advisers. "We`ve got a long way to go."
Unemployment hit a 26-year high of 9.8 percent in September. The next monthly reports come out Friday and could show it topping 10 percent.
Still, the economy is growing again. Reports out Monday show improvement in manufacturing, construction and contracts to buy homes.
Obama said that building a sustainable economy and getting people back to work remain his "administration`s overriding focus." Obama helped push through a $787 billion economic stimulus package earlier this year, and he says the administration, Congress and the private sector must take more bold steps to help.
Obama spoke as he met with his Economic Recovery Advisory Board. The session was open to reporters and streamed live on the White House Web site.
Obama added that the U.S. must break out of a "debilitating gridlock on trade policy," by ending the false choice between a wide-open, freewheeling import policy or fearful, protectionist approach to trade. He called for a more balanced policy of letting the world know America will compete and trade fairly.
3 strong economic reports lift recovery hopes
Hopes for sustainable recovery get lift from news on manufacturing, construction, home sales
* By Martin Crutsinger, AP Economics Writer
* On 4:24 pm EST, Monday November 2, 2009
WASHINGTON (AP) -- Hopes for the fledgling economic recovery got a boost Monday from better-than-expected news on manufacturing, construction and contracts to buy homes.
The surprisingly strong readings provided some comfort that the economy is packing more momentum than assumed going into the end of the year. Still, with jobs scarce, lending tight and consumers wary of spending, it`s unclear whether the gains can be sustained as government stimulus programs wind down.
The Institute for Supply Management`s gauge of manufacturing activity grew in October at the fastest pace in more than three years. It was driven by businesses` replenishing of stockpiles, higher demand for American exports and support from the government`s $787 billion stimulus program.
The ISM index shot up to 55.7 in October, the third straight reading above 50, which signals growth in the sector. It was the highest level since April 2006.
"It clearly looks like we are seeing a turnaround in the manufacturing sector," said David Wyss, chief economist at Standard & Poor`s in New York.
Economists cautioned that the manufacturing pattern seen in the past two post-recession recoveries likely will be repeated this time: In each case, early strength in manufacturing, led by companies` restocking of inventories, faded within a few months.
Wyss agrees that the ISM index could dip below 50 in the first quarter of next year. But he thinks that would be a temporary slump and not a sign that the economy was dipping back into recession.
"A bit of a slip in manufacturing would be consistent with a sluggish recovery," he said.
The overall economy, as measured by the gross domestic product, expanded at a 3.5 percent rate in the July-September quarter. That number provided compelling evidence that the longest recession since the 1930s was ending. Wyss said he expects GDP growth to slow to around 1.7 percent in the current quarter and to remain sluggish in the first half of next year.
Other economists are more optimistic, with some forecasting that GDP growth could come in around 3 percent in the current quarter. They pointed to the government report Monday that construction spending rose a bigger-than-expected a 0.8 percent in September, fueled by the strongest jump in home construction in six years. The gain in housing offset continued weakness in construction of office buildings, hotels and shopping centers.
In a third report, the National Association of Realtors said the volume of signed contracts to buy previously occupied homes rose 6.1 percent in September to a reading of 110.1. That`s the highest level since December 2006. And it`s more than 21 percent above a year ago.
The eighth straight monthly gain came as the housing market rebounds from the worst downturn in decades. The improvement has been aided by federal intervention to lower mortgage rates and bring more buyers into the market. For example, the contracts to buy homes rose as buyers scrambled to qualify for a tax credit for first-time buyers that expires at the end of this month. Congress is moving to extend the credit until April 30.
"We think this recovery is sustainable," said Sal Guatieri, an economist at BMO Capital Markets. "We think there is enough government stimulus in place to push the economy forward and manufacturing will be getting support from a weakening U.S. dollar and strength in Asia which will boost exports."
Manufacturing in China, which posted the strongest growth of the world`s major economies in the third quarter, expanded for an eighth straight month in October, according to a survey by a government-sanctioned industry group. European surveys also showed growth despite the recent climb by the euro and pound against the dollar. That currency gap makes Europe`s exports more expensive.
The expanding signs of a U.S. rebound gave an initial boost to investors on Wall Street Monday, but the rally lost some steam later in the day. The Dow Jones industrial average added nearly 77 points to 9,789.44, while broader indexes edged up.
At the White House, President Barack Obama said the public and private sectors must find more ways to create jobs to continue the recovery. In remarks at the start of a meeting with his economic advisers, Obama credited his stimulus package for recent better economic figures, including the manufacturing boost.
The president said there was still "a long way to go," especially in creating jobs.
The ISM, a trade group of purchasing executives, said its index showed manufacturing employment grew for the first time in 15 months, rising to 53.1 last month from 46.2. But the measure tracking new orders, a signal of future production, slipped in September.
Farm and construction equipment makers Deere & Co. and Caterpillar Inc. said last week that they`re adding back a few hundred jobs each. And Greenville, S.C.-based Kemet Corp., which makes parts for electric drive vehicles and alternative energy markets, is adding 113 jobs in the state because of a $15.1 million grant from the Department of Energy that is enabling the company to transfer some manufacturing from Europe to the U.S., said spokesman Dean Dimke.
But layoffs continue. Sun Microsystems Inc. said in October it plans to eliminate up to 3,000 jobs before it`s acquired by Oracle Corp.
In October, the ISM said 13 of the 18 manufacturing industries surveyed expanded, led by petroleum and coal production, apparel and furniture. Three industries shrank.
"There`s still a lot of caution from our clients," said Richard Zambacca, president of Think Resources, an engineer staffing company in Atlanta. "People are looking for funding."
AP Business Writer Tali Arbel in New York and AP Real Estate Writer Alan Zibel in Washington contributed to this report.
MARKET UPDATE
Tuesday, 3 November
10:48 AM - The markets opened sharply lower after a long weekend in line with the Asian markets. The NSE (__^NSEI__) Nifty has slipped below the 4700 mark and the BSE Sensex (__^BSESN__) below the 15850 mark in the early trade. The large caps stocks were under pressure following disappointing earnings results during the weekend. The Pharma, Auto and select Capital Goods stocks are in demand in the early trade. While, Realty, Metal and IT stocks remained under pressure. The broader market are also witnessing the selling pressure in the opening trade as the BSE Mid Cap index is now trading with a cut of more than 0.5 per cent and the BSE Small Cap index with a loss of more than 1 per cent.
L&T has secured a contract worth Rs 6897 crores from Maharashtra State Power Generation for 3X 660 MW super-critical Boiler Turbine Generator (BTG) units. This marks the largest EPC orders in India``s power sector. The stock is now trading higher by (0.58 per cent) at Rs. 1,576.20.
At 10.31 IST, the BSE Sensex is trading lower by 79.88 points or (0.50 per cent) at 15,816.40 and the NSE Nifty is trading lower by 35.85 points or (0.76 per cent) at 4,675.85.
The BSE Mid Cap is trading lower by 52.46 points or (0.87 per cent) at 5,961.84 and the BSE Small Cap is trading lower by 96.91 points or (1.37 per cent) to 6,961.81.
Tata Motors (__TATAMOTORS.BO__) reported the top gainer from the BSE Sensex pack, as it is trading up by (2.12 per cent) at Rs.577 while Reliance Communication reported the top loser trading down by (6.56 per cent) at Rs.164.40.
The Overall market breadth is negative as 643 stocks are advancing while 984 stocks are declining and the 37 stocks remained unchanged on BSE.
The Asian markets are trading mixed today as the Shanghai Composite and Straits Times index are trading up by (1.30 per cent) and (0.11 per cent) respectively. While, Hang Seng, Nikkei 225 and Seoul Composite index are trading down by (0.77 per cent), (2.31 per cent) and (0.21 per cent
| NIFTY 
