Dow Salutes September With a 255-Point Gain

NEW YORK (TheStreet) -- After getting beaten down in August, stocks roared back to life in September's inaugural session with the Dow Jones Industrial Average soaring more than 200 points Wednesday on encouraging economic news both at home and abroad.

The Dow surged from the start and maintained its gains through the closing bell. The blue chip average finished with a gain of 255 points, or 2.5%, to finish at 10,269, just 10 points below its high for the day. The S&P 500 added 31 points, or 3%, to close at 1,080, while the Nasdaq advanced 63 points, or 3%, to 2,177.

September is historically the worst month for the Dow with the blue-chip index falling in 66 out of the last 113 years, posting an average decline of 1.16% over that time. The Dow just wrapped up its worst August in nine years on Tuesday, sliding 4.3%, so trepidation seems justified. Optimistic market-watchers, however, will be heartened by a more recent trend that's seen the Dow rise in four of the last five Septembers.

Stocks rose out of the gate Wednesday morning on improving news from overseas. According to The Associated Press, Chinese factory activity expanded at a better clip. The China Federation of Logistics and Purchasing said its purchasing managers' index climbed to 51.7 this month from 51.2, marking its sole increase in the last four months. Australia's economy, meanwhile, raced higher in the second quarter, notching its fastest growth rate since 2007.

Equities then got an even bigger boost, and the Dow tracked more than 200 points higher, when a national factory activity gauge defied recent trends showing slowdowns in the sector. The Institute for Supply Management's manufacturing index, which was projected to fall to 52.9 for August from 55.5 in July according to Briefing.com, instead moved higher to a surprising 56.3 reading.

The Commerce Department also released its construction spending stats at the same time, which showed a 1% decrease in July. Consensus projections were calling for a 0.7% drop.

But the string of U.S. economic indicators started weak with a prelude to Friday's highly anticipated government jobs report. Payroll processor Automatic Data Processing said private payrolls shed 10,000 jobs in August.

Wall Street economists had believed payrolls would pick up a modest 13,000 jobs. The reported July gain also was scaled back in the report's revisions, now showing private managers added 37,000 positions instead of the gain of 42,000 originally reported.

Less dour jobs news was also released as Challenger, Gray & Christmas said layoffs declined 17% this month, making for the lowest monthly tally in over a decade.

Jim Paulsen, chief investment strategist for Wells Capital Management, said investors turned the page on a severe August downturn marked by a lack of optimism. Today's global data stream welcomed the new month, he said, by giving investors hope that "not everything is rolling over and dying."

"Here in the U.S., you get an ADP number that's really not all that disappointing, considering that jobs numbers have been so bad of late and ADP tends to underestimate nonfarm payrolls anyways," Paulsen said, noting that the ADP report often gives a more dispiriting view on private sector hiring compared to the government monthly jobs assessment. "But the real number, of course, was the ISM number, which was really, really good. Not only was it far better in the aggregate, but some of the components like employment were really solid."

Paulsen also suggested that the Challenger layoff data was encouraging because it counters a recent trend showing steady growth in initial jobless claims, and reinforces "the view that those recent claims might be distorted."

Investors were also keeping tabs on auto and truck sales stats. General Motors said sales tumbled 25% this month from a year ago, though last year's demand was benefited by the government's Cash for Clunkers program. Without the program, Ford (F) sales, too, showed an 11% drop off in August.

Meanwhile, one analyst said Toyota's (TM) 31% sales slump this month was worse than expected, even after accounting for the Cash for Clunkers program.

All 30 Dow component stocks traded higher today, led by sharp advances for Bank of America (BAC), Caterpillar (CAT) and General Electric (GE). Shares for Procter & Gamble (PG) had the weakest gains among the blue chips.

Deal speculation continued percolating Wednesday after The Wall Street Journal said several private-equity shops have been in talks to buy Burger King (BKC). The New York Times' DealBook blog, citing unnamed persons involved in negotiations, later reported that a deal could be struck between Burger King and 3G Capital in the coming days, though it remains tenuous. Investors piled into the stock, as shares soared 14.6% to trade at $18.85.

BP's (BP) ongoing fund-raising efforts to pay for costs related to the Gulf oil spill continued as the integrated oil operation said it sold a Malaysian ethylene and polyethylene unit for $363 million. Shares traded 3.8% higher at $36.14 a share.

Apple (AAPL) hosted a product unveiling event in San Francisco, where CEO Steve Jobs showed off a refreshed iPod line, updated iOS software features, a music-based community network and a refurbished Apple TV concept. Shares tracked 3% higher to $250.33 today. Live: Apple Event Blog >>

Microsoft (MSFT) is reportedly in search of a partner in China to help the firm break through in the country's internet search market. Microsoft's CEO in China told The Wall Street Journal that the software maker is planning to invest $100 million in companies there. Microsoft added 1.9% to $23.90.

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