Stocks rise on moderate economic snapshots

NEW YORK — Stocks extended their rebound from the big summer slump today after dips in manufacturing growth and construction spending raised investors' hopes for an interest rate cut.

The Dow Jones industrial average rose 91.12 to 13,448.86. The blue-chip index is about 4 percent below its record close of 14,000.41 hit July 19, but about 4.7 percent above its summer closing low of 12,845.78 reached Aug. 16.

The biggest gainer among the 30 Dow companies was General Motors, which rose $1.18, or 3.8 percent, to $31.92 after reporting a surprising increase in August sales.

Broader stock indicators also advanced. The Standard & Poor's 500 index added 15.43, or 1.05 percent, to 1,489.42, and the technology-dominated Nasdaq composite index surged 33.88, or 1.30 percent, to 2,630.24.

The market also got a boost as investors bought technology stocks viewed as bargains after being battered during last month's selloff. Tech and telecom are still seeing takeover activity despite credit concerns, and furthermore, demand for computers, cell phones and other such products appears strong.

Though today's economic data came in a bit slower than anticipated, the market built on the sharp gains it made Friday. Ahead of Labor Day weekend, Federal Reserve Chairman Ben Bernanke said the central bank stood ready to "act as needed" to prevent credit troubles from hurting the national economy — which investors believed hinted at the Fed's willingness to lower rates.

When investors returned today from the long weekend, the Institute for Supply Management said the manufacturing sector expanded more slowly in August than in July, and the Commerce Department said construction activity fell in July by 0.4 percent. Wall Street was pleased that the snapshots were neither too weak nor too strong — suggesting that the economy isn't falling apart, but that the Fed will remain inclined to cut the benchmark federal funds rate when it meets on Sept. 18, after more than a year of holding rates steady.

"We haven't had anything happen to change that outlook," said Arthur Hogan, chief market analyst at Jefferies. "Everything still points to a Fed that could lower rates."

In recent weeks, more difficult access to credit has made it harder for consumers and businesses to borrow, raising fears that tighter access to money will hurt the economy.

In keeping with its promise to aid the markets as needed, the Fed today added a relatively moderate $5 billion to the banking system through a repurchase agreement.

Further bolstering the argument for a rate cut, U.S. Federal Reserve Bank directors, in minutes released today from three discount rate meetings from July 9 to Aug. 6, said a contracting U.S. housing market posed a risk to growth.

Though the stock market appeared stable today, Wall Street is entering one of its historically most difficult months as investors return from their vacations and reassess their holdings. Last September was good for the stock market, but typically, the S&P 500 loses 0.7 percent during the month and 0.6 percent in Septembers that precede an election year, according to the Stock Trader's Almanac.

And although jitters about the credit markets are not as high as they were in August, they haven't been placated completely.

"Everybody is holding their breath, looking for more evidence that subprime and all those woes are still out there," said Kim Caughey, equity research analyst, Fort Pitt Capital Group.

Helping to boost the Nasdaq, discount wireless phone service provider MetroPCS offered to acquire rival Leap Wireless for about $5.12 billion in stock. Leap Wireless soared $10.97, or 15.1 percent, to $83.47, and MetroPCS rose $1.36, or 5 percent, to $28.65.

Giving tech an additional lift, Yahoo was named a "top pick" by a Bear Stearns analyst, an analyst raise his price target on Intel, and excitement grew over Apple's iPhone. Yahoo rose $1.24, or 5.5 percent, to $23.97; Intel rose 43 cents to $26.18; and Apple rose $5.68, or 4.1 percent, to $144.16.

"Technology stocks are the cheapest they've looked in 10 years, on an earnings multiple basis," Hogan said, noting that the tech sector was particularly pummeled during this summer's stock plunge.

Stocks in the energy sector also surged as crude futures on the New York Mercantile Exchange rose $1.04 to $75.08 a barrel, on the possibility of the hurricane season intensifying and OPEC deciding not to raise production when it meets next week.