Stocks Rallied on Global Manufacturing Data. Dow Leaders: BAC, CAT, JPM, GE, and CVX

Published on Wednesday, 01 September 2010 18:55 Written by Christopher Lynn

New York, September 1^st (TradersHuddle.com) – Stocks surged as global manufacturing data outweighed an ADP report that showed job losses for August. The improved tone helped stocks staged a rally on the first day of a month that is traditionally seen as a bad month for the equity market, with short covering helping to augment the move.

The Dow Jones Industrial Average jumped 254.75 points, or 2.54%. The S&P 500 index rallied 30.96 points, or 2.95%, while the NASDAQ surged 62.81 points, or 2.97%. Market breadth was positive. On the NYSE, winners topped decliners by a rate of 16 to 3. On the NASDAQ, advancers outpaced losers by a rate of more than 9 to 2.

The market started sharply higher as Wall Street joined a global rally after better than expected manufacturing pace in China and Europe’s better than expected PMI helped lift overseas markets and spurred market participants to return to bid equities higher. The bullish tone persisted even after the ADP report was worst than expected, as 10,000 jobs were lost at private employers.

Stocks extended their advance after the August ISM Manufacturing Index increased to 56.3, when a decline was expected. The improved tone definitely spurred bulls to return to the market, however short covering augmented the move. The gains during the first day of the month that is traditionally a bad month for the market surprise participants, specially coming after a gloomy August.

The day biggest gainers were in the industrials, financials, energy, and consumer discretionary, sectors that had been beaten down last month. Financials saw some of the biggest gains, with Bank of America (NYSE:BAC), surging more than 6% to $13.21 as shorts covered their bearish bets on the stock. Bank of America posted the biggest percentage gain in the Dow Jones Industrial Average.

JPMorgan (NYSE:JPM), the U.S. second largest lender also moved higher, climbing 3.80% to $37.74 for the third biggest gain in the blue chip index.

Industrial shares gained 3.9% as a group, with Caterpillar (NYSE:CAT), the world’s largest earthmoving equipment company, jumping 4.60% to $68.16. Caterpillar gained as the Dollar fell 0.9%, its worst single-session slide in a month, as investors were willing to hold riskier assets. Caterpillar was the second best Dow component.

General Electric (NYSE:GE), the diversified conglomerate and economic bellwether also benefited from strength in the industrial group as market participants looking for bargains moved back into economic sensitive stocks. General Electric posted the fourth biggest percentage gain in the blue chip index, as it gained 3.66% to $15.01.

The energy sector gained 3.8% as crude oil prices spiked 2.8% to $73.91 per barrel as the Dollar weakened and as global economic data signaled that demand would likely grow. Chevron (NYSE:CVX), the U.S. second largest energy producer, benefited from the higher oil prices as its shares climbed 3.63% to $76.77. Chevron rounded up the Dow’s top five components.

And Apple (NASDAQ:AAPL), the maker of iPhones and iPads, jumped close to 3% as it traded above the $250 per share level, as the company unveiled its new line of iPods for the holidays and its redesign Apple TV, which at $99 will likely become a popular item as it promises to make streaming music and movies wirelessly in an effortless manner to your TV. Apple will include a Netflix (NASDAQ:NFLX) app that will let consumers rent HD movies for $0.99 per movie thru the Internet.

Meanwhile Treasuries fell for the first time in three days, as demand for safe haven assets declined. The yield on the benchmark 10-year note shot up 11 basis points to 2.58%.