US stocks bounce back on economic optimism

Published by reposted only Date posted on December 31, 2009

NEW YORK – Wall Street stocks edged higher Wednesday after a better than expected report on manufacturing activity, indicating that a recovery from recession was on track.

The Dow Jones Industrial Average rose 3.10 points (0.03 percent) to 10,548.51, a day after the blue-chip index fell for the first time in seven sessions that saw new 2009 highs.

The technology-rich Nasdaq composite added 2.88 points (0.13 percent) to 2,291.28 and the broad-market Standard & Poor’s 500 index climbed 0.23 points (0.02 percent) to 1,126.42.

The market swung back from negative territory partly due to a report showing manufacturing activity in the Chicago area accelerated for the third straight month in December, analysts said.

The Chicago branch of the Institute for Supply Management (ISM) said its purchasing managers index rose unexpectedly to a seasonally adjusted 60.0 reading, up from 56.1 in November. Most analysts had expected the index to fall to 55.1.

The “stronger-than-expected economic report increased expectations the Federal Reserve will begin to withdraw stimulus measures,” said Wells Fargo Advisors market strategist Scott Marcouiller.

Analysts at Charles Schwab & Co. said profit taking ahead of the New Year holiday Friday continued to dog the market following massive gains this year.

The S&P 500 has rebounded more than 60 percent since March.

Trading volume was thin again Wednesday, typical during the year-end holiday season. US financial markets are closed Friday for the New Year holiday.

Pfizer fell by 0.32 percent to $18.50 after the pharmaceutical giant said it had ended an advanced trial of an experimental lung cancer drug.

Chip maker Broadcom rose 1.76 percent to $31.85 after saying it would pay more than $160 million to settle a class-action lawsuit related to stock option trades.

L-3 Communications, which makes body scanners used in airports, was up 1.51 percent to $88.50 as governments beef up airport security following a failed bid to bomb a US airliner flying from Amsterdam to Detroit last Friday.

The bond market rose. The yield on the 10-year Treasury fell to 3.784 percent from 3.809 percent Tuesday and that on the 30-year bond dropped to 4.602 percent from 4.647 percent. Bond yield and prices move in opposite directions. –Agence France-Presse

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