U.S. stocks rose, following the biggest weekly decline since June in the Standard & Poor’s 500 Index, after a measure of manufacturing beat economists’ forecasts and concern about Europe’s debt crisis eased.
Equities pared gains as Apple Inc., the world’s most valuable company, reversed an earlier advance. International Business Machines Corp. climbed 1.5 percent to a record. Goldman Sachs Group Inc. increased 2.8 percent after a report said the stock will rise as much as 25 percent within a year. Ceradyne Inc. jumped 43 percent after 3M Co. agreed to buy the company for $860 million to expand its energy unit.
The S&P 500 rose 0.3 percent to 1,444.49 at 4 p.m. New York time, trimming a rally of as much as 1.1 percent. The Dow Jones Industrial Average added 77.98 points, or 0.6 percent, to 13,515.11. The Nasdaq-100 Index fell 0.2 percent to 2,794.28. Volume for exchange-listed stocks in the U.S. was 6.3 billion shares, or 5.6 percent above the three-month average.
“Apple is a real market mover,” Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion, said in a telephone interview. “Its fundamentals are in place, but after such a big run, we’re a seeing a breather. In the U.S., manufacturing data has limited the downside risk. Yet the market is saying ‘show me’ and waiting for other data points.”
Stocks rose after data showed American factories are holding up in the face of a global economic slowdown. The Institute for Supply Management’s factory index increased to 51.5 last month. Economists in a Bloomberg survey projected a September reading of 49.7. Federal Reserve Chairman Ben S. Bernanke renewed a pledge to sustain record stimulus even after the U.S. expansion gains strength.
Earlier gains were driven by a jump in Spanish bonds after stress-test results bolstered confidence in the nation’s banking system. Euro-area manufacturing contracted less than initially estimated in September, Markit Economics said today.
“The fact that manufacturing is beginning to recover will significantly reduce fears of a potential U.S. recession,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management. His firm oversees about $325 billion. “Fears regarding the euro zone have been diminishing and today represents another positive move in that direction.”
Equities fell last week on concern Europe’s debt crisis is worsening and stimulus measures may not be enough to boost economic growth. The S&P 500 still climbed 2.4 percent in September for the fourth straight monthly gain, and ended the third quarter with a 5.8 percent advance.
Six out of 10 groups in the S&P 500 rose as consumer staples and health-care shares had the biggest gains. Apple lost 1.2 percent to $659.39, after tumbling 4.7 percent last week. The shares are still up 63 percent in 2012. IBM added 1.5 percent to $210.47.
Goldman Sachs advanced 2.8 percent to $116.86. Goldman Sachs is poised to rise as its growth outpaces peers amid a capital market recovery, Barron’s reported, citing Michael Mayo, an analyst at CLSA Ltd.
Ceradyne surged 43 percent to $34.97. 3M expects to complete the deal this quarter, according to a statement today. The board of Ceradyne, which makes technical ceramics used in industries from automotive to solar and defense, has recommended shareholders accept the $35-a-share offer, which is 43 percent higher than the closing price on Sept. 28.
Monster Worldwide Worldwide Inc. rose 4.1 percent to $7.63. The Internet recruiting service that is exploring a sale gained after DealReporter said the company is in talks with a private equity bidder, citing industry people following the matter.
Google Inc. surpassed Microsoft Corp. to become the world’s second-largest technology company, in another sign of the expanding ability of the Internet to facilitate computing tasks once completed on desktop machines.
The operator of the most popular search engine rose 1 percent to $761.78, for a market capitalization of almost $250 billion. Microsoft, the world’s biggest software maker, fell 0.9 percent to $29.49, for a valuation of about $247 billion.
The triumph over Microsoft follows Google’s rise from a search-engine invented by two Stanford University students into an advertising powerhouse that makes the world’s most popular mobile-software. It also reflects the rise of cloud computing -- where programs are stored remotely and accessed over the Internet -- as consumers shift more tasks to smartphones and tablets that they once completed on personal computers.
“The PC hardware business is obviously struggling,” said Martin Pyykkonen, a Greenwood Village, Colorado-based analyst at Wedge Partners Corp. “The transition here is pretty straightforward in terms of where things have moved to and certainly that’s cloud, that’s Web.”
Only Apple, at $618 billion, tops Google among technology companies. Apple passed Microsoft in 2010 on rising sales of iPhones and iPads -- devices that helped usher in a new era of computing that’s less reliant on PCs.
TRW Automotive Holdings Corp. increased 7.7 percent to $47.08. The world’s biggest vehicle-safety equipment supplier authorized a $1 billion share repurchase program.
MGIC Investment Corp. surged 18 percent to $1.81. The mortgage insurer that breached regulators’ capital limits said hurdles to selling new policies had been lowered.
The S&P 500 may climb to a record 1,585 next year as economic growth improves amid stimulus efforts by global central banks, said John Stoltzfus, Oppenheimer & Co.’s chief investment strategist. The forecast implies a 10 percent rally in the S&P 500 from the Sept. 28 close. The advance would take the index above its all-time high of 1,565.15 reached on Oct. 9, 2007.
“We expect the process of fostering an economic recovery from the grips of a global financial crisis will persist and ultimately prove successful,” Stoltzfus wrote in a report today. “Multiple expansion across sectors will lead to increased price levels even as corporate earnings growth may rise at a slower pace.”