Stocks recover from tumble
Stocks rose on Monday, recovering from a late-day fall, as growth in American and Chinese manufacturing and speculation the Federal Reserve will pump cash into the economy overshadowed a report that JPMorgan Chase & Co. was being probed for mortgage deals.
Intel Corp. increased 2.6 percent after an industry group said semiconductor sales rose in September. Baker Hughes Inc. rallied 4.2 percent after the oilfield-services company beat earnings estimates. JPMorgan, the largest U.S. bank by market value, lost 0.6 percent after ProPublica reported that the Securities and Exchange Commission is investigating whether it allowed a hedge fund to select assets improperly for a $1.1 billion deal backed by subprime mortgages.
The S&P 500 rose 0.1 percent to 1,184.38, after rallying as much as 1.1 percent. The Dow Jones Industrial Average increased 6.13 points, or 0.1 percent, to 11,124.62.
“We have two engines that are working right now,” said Burt White, who helps oversee $284 billion as chief investment officer at LPL Financial Corp. in Boston. “We got a great a bill of health on China and their manufacturing sector is doing extremely well. And then the U.S. manufacturing report came out and it was a great number.”
The S&P 500 surged 13 percent in September and October, the best performance in those months since 1998. It gained even though the measure has averaged a loss of 1 percent during that period since 1928, according to data compiled by Bloomberg.
This year, stocks rose, Treasuries fell in October for the first time since March and the dollar weakened to a 15-year low against the yen as investors bet the Fed will act to boost growth and companies from Microsoft Corp. to Exxon Mobil Corp. reported better-than-estimated earnings.
In late 1998, stocks rallied even as economies in Asia, Russia and parts of Latin America faltered and the Fed brokered a takeover of Long-Term Capital Management LP by the banks and securities firms that financed the ailing hedge fund. The Fed then followed up by cutting short-term interest rates twice in September and October, easing concern that a slew of failing hedge funds would trigger a slump in financial markets worldwide.
Stocks rose around the world yesterday after data showed China’s manufacturing expanded at the fastest pace in six months in October, indicating the economy can bear more gains in the yuan and interest-rate increases to cool price pressures.
“China has clearly got us off to a good start,” Jim Reid, a global strategist at Deutsche Bank AG, wrote in an e-mail.