April 2, 2012 / 7:44 AM / 7 years ago

Wall Street starts second quarter with rally

NEW YORK (Reuters) - U.S. stocks started the second quarter with a bang on Monday, with the S&P 500 climbing to a fresh four-year high as manufacturing data from the United States and China helped support the outlook for economic growth.

Traders work at the post following the IPO for fuel shipper GasLog Inc. on the floor of the New York Stock Exchange, March 30, 2012. REUTERS/Brendan McDermid

A string of mixed indicators in recent days slowed the stock market’s advance, as investors took the figures as signs that the recovery was leveling off.

The U.S. Institute for Supply Management’s index of national manufacturing activity rose to 53.4, exceeding forecasts. China’s Purchasing Managers’ Index, meanwhile, hit an 11-month high.

“Some were concerned that the first-quarter data was only strong because the weather this winter was mild ... but the ISM suggests that the strength is a little more than anticipated,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. “In addition, China’s PMI takes some of the concern of a hard landing out.”

The data helped lift energy and basic materials stocks as crude oil and commodity prices climbed. Chevron (CVX.N) rose 1 percent to $108.30. The S&P’s index of materials stocks .GSPM advanced 1.4 percent, while Alcoa Inc (AA.N) led the Dow higher with a 1.5 percent gain to $10.17.

Beauty company Coty Inc offered to buy cosmetics direct seller Avon Products Inc (AVP.N) for $23.25 a share, a 20 percent premium over Friday’s closing price. Avon jumped 17.3 percent to $22.70.

The Dow Jones industrial average .DJI added 52.45 points, or 0.40 percent, to 13,264.49 at the close. The Standard & Poor’s 500 Index .SPX rose 10.43 points, or 0.74 percent, to 1,418.90. The Nasdaq Composite Index .IXIC gained 28.13 points, or 0.91 percent, to 3,119.70.

For the S&P 500, Monday marked its highest close since mid-May 2008. The Dow scored its highest finish since December 31, 2007, while the Nasdaq once again finished at levels not seen since late 2000.

Apple Inc (AAPL.O) helped lift the Nasdaq, rising 3.2 percent to $618.63, while Home Depot Inc (HD.N) limited the Dow’s advance by falling 0.6 percent to $49.99.

Stocks ended their strongest quarter in more than two years on a positive note on Friday. The advance was led by recently underperforming sectors like energy and health care. The S&P gained 12 percent in the quarter, its best start of the year since 1998, and the best overall quarter since the third period of 2009.

“With the first quarter locked in, investors may be playing a bit of ‘catch up,’ putting their money to work today,” Luschini said.

A report in Europe showed the region’s manufacturing sector shrank for an eighth straight month in March, highlighting the difficulties in getting the euro zone’s economy on track.

Equity markets will be closed for the Good Friday holiday, which could create lighter volume and increase volatility this week. Despite the holiday, the government will release the March payrolls report on Friday. With that in mind, investors could be hesitant to make big bets ahead of the data.

Volume was light, with about 6.46 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 7.84 billion.

About 72 percent of stocks traded on the New York Stock Exchanged closed in positive territory, while on the Nasdaq, about two-thirds of issues closed higher.

Editing by Jan Paschal

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