NEW YORK, (Reuters):
STOCKS JUMPED yesterday as investors bought shares beaten down in the prior session and reacted to a report showing the manufacturing sector continued to expand.
The Dow Jones average and the Standard & Poor's 500 index posted their biggest one-day gains since June.
Manufacturing growth expanded for the third straight month in September, although the pace slowed, according to the Institute for Supply Management.
The group's manufacturing index dipped to 53.7 from 54.7 in August. While the index fell short of a consensus forecast of 55.0 in a poll taken last week, many economists had scrambled to cut their estimates after Tuesday's weak report on manufacturing in the Chicago area.
"A lot of people were concerned that the (ISM) number was going to be a disaster. It showed that things were slowing, but I don't think it points to some people's worst fears," said Stephen Massocca, the head of trading at investment bank Pacific Growth Equities.
"We're probably getting a natural technical bounce off the decline we've had over the last six or seven days," Massocca added.
The technology-laced Nasdaq Composite Index rose 45.31 points, or 2.54 percent, at 1,832.25 after losing more than 2 percent on Tuesday.
INDUSTRIAL AVERAGE
The blue-chip Dow Jones industrial average jumped 194.14 points, or 2.09 percent, to 9,469.20 after sinking more than 1 per cent a day earlier. The broad Standard & Poor's 500 Index gained 22.24 points, or 2.23 per cent, to 1,018.21.
Investors were also taking advantage of a recent slide in stock prices that has dragged major market gauges to one-month lows to put money to work on the first day of the fourth quarter, traders said.
"We've had a pretty good sell-off for the last week and a half," said Evan Olsen, the head of equity trading at Stephens Inc. "I kind of characterize it as a relief rally."
Diversified manufacturer 3M Co., bolstered the Dow index with a gain of US$1.83 to US$70.90 after it said on Tuesday that some sales growth in its existing businesses is starting to offset some economically sensitive businesses.
Yesterday was a mixed day for auto dealers and their shares.
General Motors Corp. said its September U.S. sales were up 12 per cent over the same month a year ago. Ford Motor Co.'s U.S. sales were down 0.5 percent, while DaimlerChrysler AG's Chrysler arm said its sales slumped 15 per cent.
