NEW YORK – The stock market has extended its 2009 rally into the new year.
Major stock indexes surged more than 1.5 percent Monday after improving news on manufacturing from China to the U.S. pointed to a strengthening global economy. The Dow Jones industrial average picked up 156 points.
A U.S. trade group said manufacturing activity expanded faster than expected in December. The Institute for Supply Management’s index of manufacturing activity rose to 55.9 from 53.6 in November, more than analysts had expected.
Overseas markets had started out higher on news that China’s manufacturing industry expanded last month at the fastest rate in 20 months.
There were also positive signs on manufacturing activity in Europe. A monthly purchasing managers’ index for the 16 countries that use the euro rose to a 21-month high, and a similar survey for Britain rose to a 25-month high.
Meanwhile a weakening dollar boosted commodities prices, lifting energy and materials stocks. An analyst’s upgrade of semiconductor maker Intel Corp. sent technology shares higher.
Joe Battipaglia, market strategist for the private client group at Stifel Nicolaus & Co. in Yardley, Pa., said the improved manufacturing activity boosted expectations that an economic recovery is taking hold. In particular, investors are hoping that strength in China will spill over into other countries.
"It looks like China is now the locomotive for the global economic train," Battipaglia said.
Battipaglia warned, however, that strength in China will only last if hard-hit developed economies like the U.S. and Europe can heal fast enough to absorb some of the goods China is creating.
According to preliminary calculations, the Dow industrials rose 155.91, or 1.5 percent, to 10,583.96. The Standard & Poor’s 500 index rose 17.89, or 1.6 percent, to 1,132.99, while the Nasdaq composite index rose 39.27, or 1.7 percent, to 2,308.42.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, edged down to 3.83 percent from 3.84 percent late Thursday. Markets were closed Friday for New Year’s Day.
Crude oil rose $2.15 to settle at $81.51 per barrel on the New York Mercantile Exchange.
The technology industry got a boost after Robert W. Baird & Co. upgraded chipmaker Intel Corp. to "Outperform" and increased its price target on the stock to $26. The stock has traded in a range of $12.05 to $21.27 in the past 12 months.
The dollar fell against other currencies, while gold prices rose.
Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to a relatively light 1 billion shares.
The Russell 2000 index of smaller companies rose 14.71, or 2.4 percent, to 640.10.
Britain’s FTSE 100 rose 1.6 percent, Germany’s DAX index advanced 1.5 percent, and France’s CAC-40 gained 2 percent. Japan’s Nikkei stock average rose 1 percent.