Dow Jones average kicks off September with 254-point gain
NEW YORK -- Stocks jumped Wednesday after strong growth in U.S. and Chinese manufacturing allayed some of the worries that had been building over the global economy in recent weeks.
The Dow Jones industrial average jumped nearly 255 points on the first day of September. With investors pouring into stocks, Treasury prices fell and interest rates rose.
The new reports snapped a string of disappointing economic data that sent stocks slumping in August. The Standard & Poor's 500 Index, the benchmark most widely used by professional investors, lost 4.7 percent in the month, its worst August performance since 2001.
The Institute for Supply Management said manufacturing activity in the U.S. rose in August, in contrast to regional reports from recent weeks that pointed to a slowdown in growth. Economists had expected a decline.
"It gives up hope that things may not be as bad as they seem," said Zahid Siddique, an associate portfolio manager at Gabelli Equity Trust Inc.
Some analysts have said in recent weeks that the slowdown in economic growth could eventually push the country back into recession. Industrial stocks got a big lift from the strong manufacturing report including General Electric Co. and Eaton Corp.
Daniel Penrod, senior industry analyst at the California Credit Union League, said manufacturing reports have become increasingly important because they are a leading indicator for whether companies might start adding new jobs. Investors will be closely watching the Labor Department's monthly employment report on Friday.
"If manufacturers ramp up ... it's going to require hiring," Penrod said. "Getting closer to that threshold [of hiring] is vital to the economy."
The pace of growth in China's manufacturing sector also picked up in August, while economists expected a pullback. Overseas markets rose after Australia said its economy grew in the second quarter at the fastest pace in three years.
According to preliminary calculations, the Dow gained 254.75 points, or 2.5, percent to close at 10,269.47.
Broader indexes also had large gains. The Standard & Poor's 500 index rose 30.96, or 3 percent, to 1,080.29, and the Nasdaq gained 62.81, or 3 percent, to 2,176.84.
About six stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.2 billion shares.
The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.58 percent from 2.47 percent late Tuesday. The yield on government debt anchors borrowing rates for a wide variety of consumer and business loans.