Labor Day Short Covering as Dow Explodes +235

The B Team just got the call from on hither that they cannot be short going into

Labor Day because good traders know the marketcan climb the Wall of Hurricane Earl worry and run away and hide. So this morning you see the Dow exploding higher up 235.

The Dow Jones industrial average jumped more than 220 points on the first day of September trading. Broader indexes also rose more than 2 percent. With investors pouring into stocks, Treasurys fell and interest rates rose.

The Institute for Supply Management said manufacturing activity in the U.S. rose in August, in contrast to regional reports from recent weeks that pointed to a slowdown. The ISM manufacturing index grew to 56.3 last month from 55.5 a month earlier. Economists polled by Thomson Reuters had forecast a decline.

Any reading above 50 indicates growth, so the latest reading indicates manufacturing had been growing throughout the summer, though not at the pace it did earlier this year. Nearly all economic reports over the past month had pointed to meager economic growth in the U.S., which dampened earnings outlooks and hurt stocks.

The pace of growth in China's manufacturing sector also picked up in August, according to a new report, even though economists expected a pullback. Overseas markets also got a lift Wednesday when Australia said its economy grew in the second quarter at the fastest pace in three years.

In morning trading, the Dow rose 222.89, or 2.2 percent, to 10,237.53. The Standard & Poor's 500 index rose 26.16, or 2.5 percent, to 1,075.49, while the Nasdaq composite index rose 53.86, or 2.6 percent, to 2,167.89.

About 12 stocks rose for every one that fell on the New York Stock Exchange, where volume came to 230.5 million shares.

The yield on the 10-year Treasury note, which moves opposite its price, rose to 2.60 percent from 2.47 percent late Tuesday. That yield helps set interest rates on mortgages and other consumer loans.

Investors largely wrote off a weak report on private payrolls, instead focusing on the strength in manufacturing. Payroll company ADP said private employers cut 10,000 jobs after adding a small amount of workers each of the past six months. That was below the 19,000 economists expected.

The ADP report is often considered a gauge for the government's monthly employment report, which is due out Friday. The Labor Department's data also includes government employment and has a much bigger impact on financial markets.

For more information visit http://www.worldmarketmedia.com/779/section.aspx/2312/post/labor-day-short-covering-as-dow-explodes-235

Labor Day Short Covering as Dow Explodes +235

By: Ronald Russo

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