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Stocks climb as manufacturing, spending increase

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Stock indexes rose Monday as a flurry of reports bolstered hopes that the economy is recovering.

The stronger reports on manufacturing activity and personal incomes helped shore up the market’s sentiment after three straight losing weeks that left stocks with a loss for January. Investors were already becoming more optimistic thanks to news on Friday that the economy grew at the fastest pace in six years in the final three months of 2009.

Major indicators started higher and kept the momentum up through midday trading. The Dow Jones industrial average rose 80 points, and other indexes logged similar gains. Energy stocks led the market higher following a strong earnings report from Exxon Mobil.

In economic news, U.S. manufacturing activity grew for a sixth straight month in January to the strongest level since August 2004, according to the Institute for Supply Management. The trade group said factories increased production as customers replenished inventories.

The ISM’s manufacturing index jumped to 58.4 in January from 54.9 in December. Analysts polled by Thomson Reuters had expected a level of 55.5. Any reading above 50 signals growth.

Meanwhile, the Commerce Department said consumer spending increased by 0.2 percent in December, its third straight monthly gain. The government also said personal income increased more than expected in December.

“The economy and the recovery seem to be on track. The GDP number on Friday and the ISM number today confirm that,” said Kevin Shacknofsky, portfolio manager of the Alpine Dynamic Dividend Fund in Purchase, N.Y.

The government reported last Friday that the U.S. economy grew at an annual rate of 5.7 percent in the final three months of 2009, a pace far stronger than economists had forecast.

The positive signals in the economic reports lent support to a market that fell sharply in late January, marking its worst monthly performance since the bear market early last year. The Dow Jones industrials reached a 15-month high of 10,725.43 on Jan. 19 but is still down 6.1 percent since then.

In midday trading, the Dow rose 80.86, or 0.8 percent, to 10,148.19. The broader Standard & Poor’s 500 index rose 10.00, or 0.9 percent, to 1,083.87. The Nasdaq composite index rose 9.12, or 0.4 percent, to 2,156.47.

Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.66 percent from 3.60 percent late Friday.

The dollar mostly fell against other major currencies, while gold prices rose.

On Monday, President Barack Obama sent the U.S. Congress a $3.83 trillion budget that would pour more money into the fight against high unemployment and boost taxes on the wealthy. The nation’s unemployment rate sits at 10 percent.

In corporate news, Exxon Mobil Corp. reported its fourth-quarter earnings fell 23 percent but topped analysts’ estimates. The company’s shares rose $1.87, or 2.9 percent, to $66.30, helping boost energy stocks.

Crude oil rose 90 cents to $73.79 per barrel on the New York Mercantile Exchange.

Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 395.5 million shares compared with 470.4 million shares traded at the same point Friday.

The Russell 2000 index of smaller companies rose 1.93, or 0.3 percent, to 603.97.

In afternoon trading, Britain’s FTSE 100 rose 1.1 percent, Germany’s DAX index rose 0.8 percent, and France’s CAC-40 rose 0.6 percent. Earlier, Japan’s Nikkei stock average rose 0.1 percent.

Augstums reported from Charlotte, N.C.

Traders Michael Milano, left, and Richard Newman work on the floor of the New York Stock Exchange Monday, Feb. 1, 2010.(AP Photo/Richard Drew)

Traders Stephen Holden, left, and Christopher Crotty work on the floor of the New York Stock Exchange Monday, Feb. 1, 2010. (AP Photo/Richard Drew)

Specialist Christopher Culhane, right, works at his post on the floor of the New York Stock Exchange Monday, Feb. 1, 2010.(AP Photo/Richard Drew)

© 2010 Associated Press. Displayed by permission. All rights reserved.

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