Stocks climb on news about manufacturing

NEW YORK (AP) — 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 also were 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 last only if hard-hit developed economies such as 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, and 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.