Stocks turn higher on better manufacturing report

Stocks rise after manufacturing report comes in stronger than expected

Associated Press
Dow Jones average hits highest mark since '07
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In a photo made April 16, 2012, trader Robert Arciero works on the floor of the New York Stock Exchange. Wall Street appeared headed for a higher opening Tuesday May 1, 2012 with Dow Jones industrial futures 0.1 percent higher and S&P 500 futures 0.1 percent. (AP Photo/Richard Drew)

NEW YORK (AP) -- The fastest growth in U.S. manufacturing in 10 months gave stocks a lift in early trading Tuesday and put the Dow Jones industrial average on track for its highest close in more than four years.

The Institute for Supply Management said its national manufacturing index rose to its highest level since last June. Orders, hiring and production were all higher.

A measure of manufacturing employment rose to a nine-month high, a hopeful sign ahead of Friday's monthly jobs report.

The manufacturing report jolted stock indexes out of a morning stupor. The Dow was up 96 points to 13,310 a half-hour before noon, putting the average on course for its highest close since Dec. 28, 2007.

In a separate report, the Commerce Department said construction spending ticked up slighly in March, following two months of declines.

Sam Stovall, chief equity strategist at S&P Capital IQ, said the two reports looked like evidence that the U.S. economic recovery is on solid footing despite turmoil in Europe and a weak jobs report last month.

"I think investors are encouraged there's at least one place in the world where it's still worth investing," Stovall said. "They're not ready to give up on this bull market yet."

Other indexes pushed higher. The Standard & Poor's 500 index rose 14 points to 1,412, seven points shy of its closing high for the year, set on April 2. The Nasdaq composite climbed 32 points to 3,079.

Major car companies are reporting monthly auto sales on Tuesday. Industry watchers expect overall sales to rise 2 percent for April compared with a year earlier.

The S&P finished April in the red, its first losing month since November. The Dow managed a tiny gain.

Among stocks making big moves:

— Chesapeake Energy Corp. jumped 7 percent on reports that the company will replace its chairman, Aubrey McClendon. McClendon, the company's founder, was under fire for taking out more than $1 billion in loans using the company's wells as collateral. Chesapeake recently agreed to end the program that allowed McClendon to take personal stakes in the wells. McClendon will stay on as CEO.

— Archer Daniels Midland Co. gained 7 percent after the food conglomerate reported profits that beat analysts' expectations. Profits dropped by nearly a third over the past year, pulled down by one-time charges and lower weaker results from its ethanol and oilseeds businesses.

— Avon Products Inc. fell 8 percent, the biggest drop in the S&P 500. The company said earnings plunged 82 percent, hurt by a bigger restructuring charge, commodity costs and rising labor costs. The results were worse than analysts had expected.

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