Upbeat investors send Dow higher
Encouraged by news that the manufacturing sector has begun its recovery and that consumers are spending solidly, investors sent stocks surging higher today, propelling the Dow Jones up more than 260 points for its best day in five months.
The Nasdaq composite index, meanwhile, scored its best point gain in nearly three months.
‘‘The message is very clear: the outlook for the economy is getting better. The news is just very upbeat,’’ said Hugh Johnson, chief investment officer at First Albany Corp.
The Dow Jones industrial average closed up 262.73, or 2.6%, at 10,368.86. The last time the Dow racked up more points in a day was September 24, when it rose 368.05.
The Nasdaq composite index soared 71.28, or 4.1%, to 1,802.77, claiming its biggest point win of the year. The last time the Nasdaq had a larger daily point gain was on December 5, when it climbed 83.74.
The Standard & Poor’s 500 index rose 25.05, or 2.3%, to 1,131.78.
The sustained advance was a reversal of rallies on Wednesday and Thursday morning that fizzled in late afternoon trading to result in stocks closing down both days.
‘‘Investors certainly are reacting to the better economic data,’’ said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
Friday’s surge is ‘‘a real positive sign that expectations are more positive about the economy,’’ Berman said.
The Commerce Department reported that spending by consumers, which accounts for two-thirds of all economic activity in the United States, rose 0.4% in January after being flat in December.
The department also said Americans’ incomes, which include wages, interest and government benefits, also increased by 0.4% in January, the largest advance in six months.
Separately, the Institute for Supply Management said its index of business activity rose to 54.7 in February from 49.9 January. It was the first reading over 50, the point signifying expansion, since July 2000. The institute was formerly known as the National Association of Purchasing Management.
Encouraged that an economic recovery was at hand, investors bid stocks higher. Blue chips gains were widespread, but because their relative safety has kept them pretty stable, analysts were more heartened by the rally in tech stocks.
‘‘It’s particularly encouraging to see bull sectors doing the best. Technology, telecommunications and consumer cyclicals are at the top,’’ Johnson said.
Still, analysts remained cautious given the market’s recent fluctuations.
‘‘Volume is still somewhat light, showing that the rank-and-file still have some reservations,’’ said Bryan Piskorowski, a market commentator at Prudential Securities. ‘‘It’s nice to see March coming in like a lion, but it’s still a work in progress.’’
Advancing shares outnumbered decliners 7 to 3 on the New York Stock Exchange, where volume was light.
The Russell 2000 index, which measures the performance of smaller company stocks, rose 8.98, or 1.9 percent, to 478.34.
