Dow Rallies 136 Points – Wall Street Journal

2 Nov

A series of strong economic data helped the Dow Jones Industrial Average to its strongest start to a month since January.

The blue-chip index jumped 136.16 points, or 1%, to 13232.62 on Thursday, its biggest daily gain in seven weeks. Better-than-expected readings on consumer confidence and worker productivity in the U.S. and manufacturing in both the U.S. and China boosted sentiment.

The gains were combined with a pickup in U.S. trading volume as roads and transport systems in the Northeast gradually opened, allowing more traders back to work. Some 3.87 billion shares changed hands in New York Stock Exchange composite volume, up from 3.53 billion on Wednesday, when stock markets reopened after a two-day shutdown caused by superstorm Sandy that rocked the region. Thursday’s volume was the highest in six weeks.

Trading activity also likely was boosted by the flip of the calendar page, as mutual funds and hedge funds starting with a clean slate for the month—and in some cases, their fiscal year—put money to work.

A manufacturing report from China helped start the day on a positive note. That was followed by a report in the U.S., which showed a second month of expansion in the sector following a summer of weakness. The U.S. data, in particular, helped buttress a view that the economy may be finding its footing. Housing data and consumer-confidence reports also have picked up.

“These numbers give us the sense that it’s going to be OK,” said J.J. Kinahan, chief derivatives strategist at TD Ameritrade . “The economy is taking body punch after body punch, but it still seems pretty strong.”

Another test comes Friday, when the government releases its monthly jobs report. That survey takes on added importance this month as it is released just days before the presidential election next Tuesday.

Bloomberg NewsThe Dow climbed 136.16 points, its biggest gain in seven weeks. Above, the New York Stock Exchange.

Last month’s report showed a drop in the unemployment rate to its lowest level since January 2009. Many investors will be watching to make sure that reading wasn’t an aberration and that the jobs recovery is on track. Economists, on average, expect the economy to have added 125,000 new jobs in October, according to a Dow Jones Newswires survey. They also expect the unemployment rate to rise to 7.9% after sliding to 7.8% in September.

After October’s strong reading, “we think it will be just good enough tomorrow,” said Phil Orlando, chief equity strategist for Federated Investors Inc. in New York, which manages $370 billion. Even a good enough report, he added, would likely keep the rally on track.

Thursday’s gains came mainly from sectors linked to the economy, as well as those that would benefit from the reconstruction effort after the storm in the Northeast. Masco, a provider of building supplies, was among the biggest gainers on Thursday, climbing $1.04, or 6.9%, to $16.13.

Home builders and home-improvement stores also jumped. Lennar rose 82 cents, or 2.2%, to 38.29, and KB Home gained 49 cents, or 3.1%, to 16.47. Home-improvement chain Home Depot rose 88 cents, or 1.4%, to 62.26, as did Lowe’s, up 58 cents, or 1.8%, to 32.96.

Technology stocks rallied broadly, after trailing the rest of the market throughout October.

“Tech has been getting clobbered. So as people come back from being out of the office, tech is the place they are looking for deals,” said Uri Landesman, president of New York hedge fund Platinum Partners, which oversees $1.1 billion in assets.


In the longer term, Mr. Orlando said his firm is taking a bullish view on the stock market, given signs of strength in economies around the world.

“We don’t think this is a one-day aberration,” he said. “The weakness in emerging markets, with China at the top of the list, is at or near a bottom, and we think China and Brazil will do better going forward.” He added that, with European leaders “doing the right things,” the picture for the global economy will be brighter.

He also is confident that, regardless of how the U.S. election plays out next Tuesday, members of Congress would strike a deal to avert tax increases and spending cuts that are due at year’s end, known as the “fiscal cliff. “”That’s a negative that’s been hanging over the market,” Mr. Orlando said. “People are too pessimistic about that.”

In earnings news, Exxon Mobil gained 43 cents, or 0.5%, to 91.60, after the energy company’s quarterly earnings and revenue exceeded analyst expectations.

Pfizer fell 32 cents, or 1.3%, to 24.55, after the pharmaceutical company’s third-quarter earnings and revenue came in well below analyst expectations. It reported lower sales of its cholesterol drug Lipitor.

Shares of insurance companies edged lower as investors tried to handicap how much insurers would be on the hook for losses from this week’s storm. Despite posting better-than-expected earnings, Allstate fell 93 cents, or 2.3%, to 39.05, while MetLife weakened one cent, or less than 0.1%, to 35.48.

Visa climbed 5.12, or 3.7%, to 143.88, after the credit-card company topped earnings and revenue expectations, and announced a $1.5 billion share-repurchase program a week after increasing its quarterly dividend by 50%.

Abercrombie & Fitch jumped 2.65, or 8.7%, to 33.23, and Aéropostale climbed 1.26, or 11%, to 13.21, after the two retailers offered better-than-expected projections on coming earnings reports.

Zumiez slumped 4.19, or 17%, to 21.13, after the sports apparel retailer lowered its fiscal quarterly earnings outlook, citing disappointing sales in Europe.

Abiomed slid 6.21, or 31%, to 13.61, after the biotechnology company said there is a federal investigation into the marketing and labeling of one of its products.

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