U.S. stocks mostly rose on Monday as growth in manufacturing provided more evidence that the economy may be picking up, or at least not getting any worse.
The gains came after news that U.S. manufacturing grew in September for the first time in four months.
The Institute for Supply Management, a trade group of purchasing managers, also said its gauge of manufacturing employment rose following a decline in August. That's a hopeful sign that the government's monthly employment report, due out Friday, could come in better than analysts have been expecting.Also Monday, the government said U.S. builders spent more on home construction in August, the latest positive sign for the housing market. Investors are looking for signs that there will be more workers with money to spend, said Jerry Webman, chief economist for OppenheimerFunds Inc. That can create a "virtuous cycle" that generates its own fuel for a recovery. "If you're going to manufacture more you're going to employ more people, and if you employ more people you're going to pay them money, and they're going to buy some stuff," helping the economy, Webman said. It was still a choppy day on Wall Street. The manufacturing report came out half an hour after trading began, and sent stocks sharply higher. The Dow Jones industrial average rose as much as 161 points and the Standard & Poor's 500 index rose as much as 1.1 percent. But market indexes gave up most of their gains in the afternoon. The decline started after Federal Reserve Chairman Ben Bernanke said the Fed needs to keep interest rates low because the economy isn't growing fast enough to reduce high unemployment. Bernanke made the remarks in a speech to the Economic Club of Indiana. It wasn't clear whether investors were reacting directly to Bernanke's remarks or just taking profits from a morning in which stocks showed their strongest gains in two weeks. Monday was only the third day since Sept. 17 that the S&P 500 has risen.
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