Dow Makes Triple-Digit Gain

Stocks closed higher on a manufacturing surge in January and stronger-than-expected earnings from Exxon Mobil.
By David Moss ,

NEW YORK (

TheStreet

) -- The

Dow

closed Monday with a triple-digit rally, as January manufacturing activity far exceeded expectations and better-than-expected earnings from

Exxon Mobil

(XOM) - Get Report

helped the market look past weak construction spending data.

The

Dow Jones Industrial Average

gained 118 points, or 1.2%, to 10,186. The

S&P 500

picked up by 15 points, or 1.4%, at 1089 and the

Nasdaq

improved by 24 points, or 1.1%, at 2171.

Exxon Mobil

(XOM) - Get Report

was one of the Dow's top performers, preceded only by

Alcoa

(AA) - Get Report

and

DuPont

(DD) - Get Report

. Although Exxon recorded a loss in its refining unit and an overall profit decline of 23%, the company's fourth-quarter profit of $1.27 a share easily exceeded analysts' expectations for earnings of $1.19 a share. Shares rose 2.7%, to $66.18.

>>Five Value Stocks to Buy as Market Dips

Crude oil for March delivery rose $1.54 to settle at $74.43 a barrel, all of which helped energy stocks lift the broader averages. The NYSE Arca Oil Index rose 2.5%, while the Philadelphia Oil Service Sector Index improved by 3.6%.

Natural gas futures also surged 30 cents to $5.43 per million British thermal units on cold weather forecasts.

Late Monday,

Anadarko Petroleum

(APC) - Get Report

said it earned an adjusted 4 cents a share in the fourth quarter, outpacing estimates by a penny, though profit still fell over 70%. Shares were retreating in extended trading after surging 2.1% in the regular session.

Chip stocks made market-leading gains today after a Broadpoint AmTech analyst offered an upbeat assessment of the sector. The Philadelphia Semiconductor Index rose 3.1% on the day.

But the catalyst for the market's move higher came in the morning, when the Institute for Supply Management said its

manufacturing index rose to 58.4 in January. The measure was much higher than the reading of 56.7 that economists had been expecting and a significant improvement from December's downwardly revised level of 54.9.

Construction spending, meanwhile, slumped 1.2% in December -- a much bigger decline than the mild 0.3% slump that economists had projected. The Census Bureau also revised down November's reported dip of 0.6%, to a bearish 1.2% slump.

In other macroeconomic news, the Commerce Department said

personal spending rose 0.2% in December, which was slightly below the 0.3% increase that economists had been expecting and well below November's 0.7% rise. For 2009, personal spending declined 0.4%. Personal income slightly exceeded expectations, rising 0.4% in December.

"The December personal income report showed that real disposable income increased by 0.3% for the month, the fourth consecutive gain in real income. This string of consistent real income gains is supportive of ongoing increases to real consumer spending in the first quarter of 2010, which will be a key pillar of ongoing moderate GDP growth," said PNC chief economist Stuart Hoffman, adding that the weak labor market continues to weigh on the wage and salary aspect of personal income.

"Nominal wages grew by only 0.1% in December, just keeping pace with inflation. Labor market conditions are stabilizing but only grudgingly," he said.

Hoffman expects a 35,000 decline to payrolls and a slight rise in the unemployment rate to 10.1% when the government releases its

January nonfarm payrolls report on Friday.

President Obama kicked off the month with the introduction of a

proposed $3.8 trillion budget that would push the federal deficit to $1.6 trillion with additional stimulus spending aimed at job growth. The budget, however, aims at lowering the deficit in the longer term with a three-year spending freeze.

According to a separate survey of senior loan officers released in the afternoon, the

Federal Reserve

said U.S. banks are no longer tightening credit requirements. Still, financial institutions have yet to loosen credit for business and consumer borrowers. The report also showed that demand for many loans remained weak at many banks.

Monday's positive data helped markets begin both the week and the month on strong footing after January proved to be its

weakest month in nearly a year.

"Mid-January's market brouhaha was a relatively inexpensive reminder that longer-term macro risks are not necessarily behind us," said UBS equities strategist Jonathan Golub, pointing to significant challenges facing the Federal Reserve and lingering global credit concerns.

"But enough of all this harrumphing, while stock prices fell apart, company results and incoming economic data have been all smiles," he added. "It's hard to believe that fourth-quarter earnings could be this strong following last quarter's stellar results. With roughly 40% of companies reporting, 80% have surprised on the upside."

Fourth-quarter earnings from

Humana (HUM) - Get Report

met expectations and the company raised its year-end guidance by a dime. The stock added 9 cents to finish at $48.71.

In other news, billionaire investor Carl Icahn plans to leave

Blockbuster's

(BBI) - Get Report

board of directors. The movie and video game rental company's stock traded 6.7% higher.

Amazon

(AMZN) - Get Report

saw its stock give up $6.54, or 5.2%, at $118.87 after it went back on the hard line it took with publisher Macmillan, agreeing to raise e-book prices.

Shares of

Boston Scientific

(BSX) - Get Report

slumped 2.4% to $8.42 after the company lost a patent-related dispute with

Johnson & Johnson

(JNJ) - Get Report

. Boston Scientific will pay a $1.725 billion settlement to J&J.

Shares of Boston Scientific trailed

Citigroup

(C) - Get Report

,

Bank of America

(BAC) - Get Report

and

Ford

(F) - Get Report

in the list of stocks seeing the heaviest volume on the

New York Stock Exchange

, which had a listed volume of nearly 4.1 billion.

The U.S. dollar weakened slightly against a basket of currencies, with the dollar index lower by 0.2%. The most actively traded April

gold contract, meanwhile, added $21.20, to settle at $1,105 an ounce.

Gold-related stocks soared on the day, as the Philadelphia Gold and Silver Index jumped 5.6%.

The benchmark 10-year Treasury note weakened 19/32, lifting the yield to 3.662%.

Overseas, Hong Kong's Hang Seng finished up 0.6% and Japan's Nikkei gained 0.07%. The FTSE in London was up by 1.1% and the DAX in Frankfurt was ahead by 0.8%.

--Written by Melinda Peer and Sung Moss in New York

.

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