Dow Average Rallies to Highest Since 2007 on Manufacturing Data

Rita Nazareth, ©2012 Bloomberg News

Tuesday, May 1, 2012

May 1 (Bloomberg) -- U.S. stocks advanced, sending the Dow Jones Industrial Average to the highest level since December 2007, after a better-than-estimated manufacturing report bolstered investors' optimism in the world's largest economy.

JPMorgan Chase & Co., Intel Corp. and Alcoa Inc. climbed at least 1.8 percent to pace rallies among the biggest companies. The Dow Jones Transportation Average, a proxy for economic growth, increased 1.1 percent. Sears Holdings Corp. soared 15 percent as it forecast a profit after selling some stores in the U.S. and Canada. Stocks pared gains after Apple Inc., the world's most valuable company, reversed an earlier advance.

The Standard & Poor's 500 Index advanced 0.6 percent to 1,405.82 at 4 p.m. New York time, the highest level since April 3. The Dow increased 65.69 points, or 0.5 percent, to 13,279.32. The Russell 2000 Index of small companies retreated 0.1 percent to 815.89. About 6.7 billion shares changed hands on U.S. exchanges today, or almost in line with the three-month average.

"The economy is starting to get on its own two feet," said Wayne Lin, a money manager at Baltimore-based Legg Mason Inc. His firm oversees $643.3 billion. "Manufacturing is forward-looking. It leads what the actual economic activity tends to end up being. It tells us that firms are being a bit less conservative. Confidence is starting to reemerge."

Stocks rose as manufacturing unexpectedly expanded in April at the fastest pace in 10 months. The report added to optimism after data showed growth in Chinese manufacturing. Investors also watched corporate earnings as 74 percent of S&P 500 companies that reported results since April 10 have beaten projections, according to data compiled by Bloomberg.

Dow Average Rallies to Highest Since 2007 on Manufacturing Data