Dow hits 4-year high, lifted by ISM factory data

NEW YORK Tue May 1, 2012 4:36pm EDT

Traders work on the floor of the New York Stock Exchange, May 1, 2012. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange, May 1, 2012.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - The Dow closed at its highest level in more than four years on Tuesday after U.S. manufacturing expanded at a faster pace than expected in April, easing jitters about a slowdown in the economic recovery.

The Dow now sits at levels not seen since December 2007. The gains leave the benchmark S&P 500 within about 16 points of a high reached in May 2008. A convincing break above that level could set the market up for more gains, traders said.

"That's where a lot of traders' eyes are right now - it might be tough to get through there the first time," said Michael James, senior trader at Wedbush Morgan in Los Angeles.

But the Nasdaq sold off sharply into the close on weakness in Apple (AAPL.O) and BlackBerry maker Research in Motion RIMM.O in a sign the market could struggle to make further headway in the short-term.

The Institute for Supply Management said U.S. manufacturing growth came in at its strongest rate in 10 months in April. That reading suggested the economy remains resilient after indications it had lost momentum at the start of the second quarter.

Early gains this year have been held in check in recent weeks on worries about U.S. economic growth.

Shares of Intel Corp (INTC.O), long touted by many investors as undervalued, hit a 52-week high at $29.05. Intel closed at $28.95 - up 2 percent - in a sign that money is still flowing into large-cap technology stocks as the market grinds higher.

Financial, transportation and energy shares, all of which are linked to economic growth, were strong performers. The S&P financial sector index .GSPF rose 1.1 percent, helped by a 2.5 percent gain in Bank of America, which closed at $8.31. Chesapeake Energy (CHK.N) rose 6.3 percent to $19.60 ahead of the natural gas producer's earnings after the bell.

Tuesday's move higher, which came in a relatively quiet market with European exchanges closed for May Day holidays, drove the S&P 500 within striking distance of its recent high at 1,422.38.

"If we get up there, fail and don't retrace too much before the weekend, I would not be surprised to see it move through," said James.

The Dow Jones industrial average .DJI gained 65.69 points, or 0.50 percent, to 13,279.32 at the close. The Standard & Poor's 500 Index .SPX rose 7.91 points, or 0.57 percent, to 1,405.82. The Nasdaq Composite Index .IXIC added 4.08 points, or 0.13 percent, to 3,050.44.

The Dow earlier rose as high as 13,338.66 points, its highest since December 2007.

In April, the S&P 500 posted its first monthly decline since November as economic data pointed to a slowing domestic economy and continued flare-ups in the euro zone highlighted the risks of the region's debt crisis.

Of the 321 S&P 500 companies that have reported quarterly results so far, 71.3 percent have topped analysts' estimates, according to Thomson Reuters data through Tuesday morning,

Chesapeake, the nation's No. 2 natural gas producer, was also helped after it said it will name an independent, non-executive chairman to replace Aubrey McClendon. The company will also end a controversial program that has granted McClendon minority stakes in Chesapeake's wells.

BP Plc's (BP.L) profit dropped on a fall in production prompted by the sale of oil fields to pay for the Gulf of Mexico disaster. U.S.-listed shares of BP (BP.N) fell 1.6 percent to $42.70.

Huntsman Corp (HUN.N) jumped 8.9 percent to $15.42 after profit nearly tripled on higher prices for its chemicals.

Health-care stocks rose, boosted by Molina Healthcare Inc (MOH.N), which advanced 3.5 percent to $26.54 after the company's earnings topped estimates. The Morgan Stanley healthcare payor index .HMO gained 1.7 percent.

PF Chang's China Bistro Inc PFCB.O surged nearly 30 percent to $51.48 after the restaurant chain agreed to be bought by a private equity firm.

Volume was 6.64 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE Amex, below the daily average this year of 6.76 billion.

Advancers outpaced decliners by a ratio of about 2 to 1 on the NYSE. But on the Nasdaq decliners just outstripped advancers.

(Reporting by Edward Krudy; Editing by Jan Paschal)

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Comments (4)
brotherkenny4 wrote:
And the bad news just keeps on rolling in. Thank God the evangelical republicans are coming to put a stop to our feedom, and make us feel guilty about living. We don’t deserve success, we need to feel pain and be punished for the evil that is in our hearts and the republicans are just the people to do that. (note: this is sacasm in case you didn’t get it)

May 01, 2012 1:24pm EDT  --  Report as abuse
greg1950 wrote:
Enjoyed your comment botherkenny4! Yes, let return to the prosperity of the Bush Era! Thankfully, the Evangelical’s are ralling around the Mitten, they deserve one another!

PROGERSSIVE THOUGHT OVERCOME BLIND STUPIDITY EVERTIME!

May 01, 2012 1:51pm EDT  --  Report as abuse
rbe4free wrote:
The truth they don’t want the people to know is that fiat currency is worthless, it has no value, it is not backed by anything at all, no precious metals and hasn’t been for years. When a loan is created neither the principal nor the interest is printed, it exists only as numbers in a computer. It is in fact created from thin-air.

Don’t tell anyone though as the truth is so simple that noone would believe you.

When unemployment reaches 30% or more(we’re already at 20%) due to technological displacement and all those people lose their purchasing power in the current monetary system, how will the system survive? Simply put the system cannot sustain itself without the participation of the consumer. It is doomed to fail.

When will everyone wake up and realize that blaming a political puppet or switching to a new one, will not change anything, when the puppeteer remains the same.

The Federal Reserve Cartel: The Eight Families; The 1913 creation of the Fed fused the power of the Eight Families to the military and diplomatic might of the US government. If their overseas loans went unpaid, the oligarchs could now deploy US Marines to collect the debts. Morgan, Chase and Citibank formed an international lending syndicate.

Until this is disolved, there will never be any change for the better, except for the financial elite.

Why is it, no matter which news site I go to, all the people’s comments are the same? Everybody whines about the situation, but nobody offers any alternative solutions. Here’s one if you’re serious about a solution, check out The Venus Project. If you have questions about it check out the FAQ page. =)

May 01, 2012 3:41pm EDT  --  Report as abuse
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