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TheStreet Open House

Stocks End Higher as Global Manufacturing Improves

Stocks in this article: ^DJI ^GSPC ^IXIC


NEW YORK ( TheStreet) -- U.S. stocks finished higher Wednesday after strong manufacturing reports from the U.S., Europe and Asia boosted optimism.

The Dow Jones Industrial Average rose 83.3 points, or 0.7%, to 12,716. The S&P 500 climbed 11.7 points, or 0.9%, to 1,324. The Nasdaq rose 34.4 points, or 1.2%, to settle at 2,848.

All but four of 30 components on the Dow rose. McDonald's (MCD), Johnson & Johnson (JNJ), Pfizer (PFE) and Chevron (CVX) fell, while Bank of America (BAC), Hewlett-Packard (HPQ) and United Technologies (UTX) led gains among the blue chips.

Stocks started higher Wednesday morning after a report from the Institute for Supply Management showed that U.S. manufacturing activity continued to increase at a faster pace last month, rising to 54.1 in January from a downwardly revised 53.1 the prior month. While slightly missing the estimate of 54.5, the reading indicating expansion supported strong data from Germany and China.

In China, the world's fastest growing economy, factory indexes also improved. The official Chinese purchasing manager's index climbed to 50.5 in January from 50.3 the prior month, while a separate indicator from HSBC showed factory orders contracted the least in three months.

Meanwhile, there was also reason for optimism in Europe as Germany, Europe's largest economy, saw output grow for the first time in four months. The U.K., too, saw manufacturing expand for the first time in four months.

Also on the U.S. economic data front Wednesday was a preview of Friday's government jobs report from payroll processing firm Automatic Data Processing. Companies added 170,000 new jobs in January, according to ADP, falling short of the 185,000 estimate from Thomson Reuters. December payrolls were downwardly revised to 292,000 from 325,000. Monthly gains in employment have averaged 223,000 over the last three months, suggesting that the jobs recovery remains anemic.

Construction spending climbed the most in fourth months during December. The Commerce Department said that building outlays rose 1.5%, beating the expected 0.6% increase and adding to a 1.2% increase in the prior month.

"Equity bulls aren't asking for much," said Ed Yardeni of Yardeni Research. "It doesn't take much to make us happy... All we want to see every day is that the Italian government bond yield is closer to 6% than 7%. This morning, it is at 5.72%." Investors have looked to yields in Italy as a rough gauge of the stability of the debt crisis in the region.

Downbeat corporate news, including a revenue disappointment from Amazon.com (AMZN - Get Report) on the Nasdaq, didn't stop gains in the broader market. The giant Internet retailer beat expectations in earnings of $177 million, or 38 cents a share but fell short on sales of $17.43 billion. The average estimate of analysts polled by Thomson Reuters was for earnings of 17 cents a share in the quarter on sales of $18.25 billion. Amazon also said it may see an operating loss of $200 million and and a decline in profit between 162% and 69% in the first quarter compared with the same period in 2011. Shares slipped 7.7% to $179.46.

"The stock has now devolved into a wait-and-see situation and nothing more," said Jim Cramer, RealMoney columnist and Action Alerts PLUS manager, of Amazon.

In the auto sector, Ford Motor (F - Get Report) reported January sales rose 7%, while Chrysler sales rose 44%, but General Motors (GM - Get Report) reported a 6% decline as it cut incentive spending. The results from the three companies were roughly in line with expectations, although Chrysler's sales were somewhat higher than the 34% sales gain forecast by TrueCar.com. Overall, U.S. light vehicle sales are expected to gain 6% to 7% in January. Ford sank 0.7% and General Motors gained1.5% on Wednesday.

Buzz around the possible initial public offering filing of Facebook was high on Wednesday. According to news sources, the company may seek to raise $5 billion when it files its S-1, down from previous reports that Facebook was looking to sell as much as $15 billion worth of stock.

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