Stocks on the Rise After Jittery Start

Updated from 12:23 p.m. EDT

Stocks on Wall Street were buoyant Thursday afternoon as an encouraging manufacturing report helped investors look past a raft of otherwise disappointing economic data.

The Dow Jones Industrial Average had a shaky start but was recently rising 46 points, or 0.4%, to 12,944. The S&P 500 climbed 7 points, or 0.5%, to 1416, and the Nasdaq Composite tacked on 23.5 points, or 0.9%, to 2520.

Investors were bearish at the open, but perked up after northeastern factory activity data showed vast improvement. The Philadelphia Fed Index came in at negative 15.6 for May -- still a sizable contraction, but far less egregious than last month's decline of 24.9, and better than the economists' consensus for negative 19.

"Overall the survey is soft," said Ian Shepherdson, chief U.S. economist with High Frequency Economics, in an emailed statement, "but its weakness has not been fully reflected in the one industrial survey that really matters, the [Institute for Supply Management] report."

The ISM report is a closely watched survey of nationwide manufacturing numbers.

Sheperdson added that the Federal Reserve's industrial output numbers show that "manufacturing is now struggling, though it is certainly not in meltdown." The report revealed that industrial production fell 0.7% in April, worse than the 0.3% decline that had been expected. March was revised to show an increase of only 0.2%, rather than the 0.3% uptick that had been reported.

"The decline in output ex-autos was broad, with falls in consumer goods, materials, construction supplies and business equipment," Shepherdson said. "The dollar value of business equipment produced -- a key indicator of capital spending -- fell a hefty 1.8%, after being flat for the past three quarters or so. Further declines would be very worrying."